[Routledge Advances in Production and Operations Management] Juhani Ukko, Minna Saunila, Janne Heikkinen, R. Scott Semken and - Real-time Simulation for Sustainable Production_ Enhancing User Experience and Creating Bu

Real-time Simulation for
Sustainable Production
This book provides a comprehensive overview of potential opportunities and the

business value position related to implementing physics-based real-time simulation
to production. The objective of real-time simulation is to provide value for all three
dimensions of sustainability: economic, social, and environmental.
By reviewing actual industrial cases and presenting relevant academic research, the
book examines the topic from four interrelated viewpoints: the industrial need for
sustainable production, the development of game-like virtual environments, capturing
customer value and enhancing the user experience, and finally, establishing business
value. It offers a framework that will enable a rethink and shift in mindset to appreciate
how real-time simulation can change the way products are manufactured and services
are produced.
This book will appeal to researchers and scholars in areas as diverse as strategic man-
agement, manufacturing and operations management, marketing, industrial economics,
and product lifecycle management.
Juhani Ukko is a senior researcher at LUT University, School of Engineering Science,

Department of Industrial Engineering and Management, Finland. His current research
focuses on performance measurement, operations management, digital transformation,
digital services, and corporate sustainability performance.
Minna Saunila is a senior researcher at LUT University, School of Engineering

Science, Department of Industrial Engineering and Management, Finland. Her research
covers topics related to performance management, innovation, service operations, and
sustainable value creation.
Janne Heikkinen works as a post- doctoral researcher in Laboratory of Machine

Dynamics at LUT. His research interests are in the fields of rotordynamics, structural
vibrations, multibody simulation, and vibration measurements.
R. Scott Semken is a senior researcher at the LUT University School of Energy

Systems, Department of Mechanical Engineering, Finland, working in the Laboratory
of Computational Mechanics.
Aki Mikkola is working as Professor in the Department of Mechanical Engineering at

LUT University, Finland. His major research activities are related to flexible multibody
dynamics, real-time simulation, rotating structures, and biomechanics.
Routledge Advances in Production and Operations
Management
This series sets out to present a rich and varied collection of cutting-edge
research on production and operations management (POM), addressing key
topics and new areas of interest in order to define and enhance research in this
important field. Bringing together academic study on all aspects of planning,
organizing and supervising production, manufacturing or the provision of ser-
vices, subject areas will include, but are not limited to: operations research,
product and process design, manufacturing strategy, scheduling, quality manage-
ment, logistics and supply chain management. Highly specialised and industry-
specific studies are actively encouraged.
Real-time Simulation for Sustainable Production

Enhancing User Experience and Creating Business Value
Edited by Juhani Ukko, Minna Saunila, Janne Heikkinen, R. Scott Semken
and Aki Mikkola
For more information about this series, please visit: www.routledge.com/

The-Routledge-Philosophers/book-series/RAPOM
Real-time Simulation for
Sustainable Production
Enhancing User Experience and Creating
Business Value
Edited by
Juhani Ukko, Minna Saunila,
Janne Heikkinen, R. Scott Semken
and Aki Mikkola
First published 2021
by Routledge
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and by Routledge
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© 2021 selection and editorial matter, Juhani Ukko, Minna Saunila, Janne Heikkinen,
R. Scott Semken and Aki Mikkola; individual chapters, the contributors
The right of Juhani Ukko, Minna Saunila, Janne Heikkinen, R. Scott Semken and
Aki Mikkola to be identified as the authors of the editorial material, and of the
authors for their individual chapters, has been asserted in accordance with sections
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British Library Cataloguing-in-Publication Data
A catalogue record for this book is available from the British Library
Library of Congress Cataloging-in-Publication Data
Names: Ukko, Juhani, editor.
Title: Real-time simulation for sustainable production : enhancing user
experience and creating business value / edited by Juhani Ukko,
Minna Saunila, Janne Heikkinen, R. Scott Semken and Aki Mikkola,.
Description: Abingdon, Oxon ; New York, NY : Routledge, 2021. |
Series: Routledge advances in production and operations management |
Includes bibliographical references and index.
Identifiers: LCCN 2020054552 (print) | LCCN 2020054553 (ebook) |
ISBN 9780367515164 (hbk) | ISBN 9780367515188 (pbk) |
ISBN 9781003054214 (ebk)
Subjects: LCSH: Sustainable development–Simulation methods. |
Sustainability–Simulation methods.
Classification: LCC HC79.E5 R4154 2021 (print) |
LCC HC79.E5 (ebook) | DDC 658.5/038–dc23
LC record available at https://lccn.loc.gov/2020054552
LC ebook record available at https://lccn.loc.gov/2020054553
ISBN: 978-0-367-51516-4 (hbk)
ISBN: 978-0-367-51518-8 (pbk)
ISBN: 978-1-00-305421-4 (ebk)
Typeset in Bembo
by Newgen Publishing UK
Contents
List of illustrations viii

List of contributors xi
1 Creating value with sustainable production based on

real-time simulation 1
M I N N A S AU N I LA, JUHANI UK KO, JANNE HE I K K IN EN,
R . S C OT T S E M K E N AND AK I MI K KO LA
PART I
Industrial needs of sustainable production 11
2 Identifying industrial needs for real-time simulation and
digital twins 13
L E A H A N N O L A, I LK K A D O NO GHUE , K I RSI KO KKON EN,
K ALLE E L F V E N GRE N AND JO RMA PAPI NNI E MI
3 Company capabilities and implementing real-time

activities 28
M I N A N ASI RI , JUHANI UK KO, MI NNA SAUNI LA
A N D T E RO R ANTALA
4 Real-time simulation strategies: implications for operational

excellence and sustainability performance 42
M I N N A S AU N I LA, MI NA NASI RI AND JUHANI UKKO
5 Selling digital twins in business-to-business markets 51

T U I JA R AN TALA, K I RSI KO K KO NE N AND LE A HA N N OL A
vi Contents
PART II
Game-like virtual environments 63
6 Accelerating design processes using data-driven models 65
E M I L K U RV I NE N, I I NE S SUNI NE N, GRZE GO R Z OR Z ECH OWSKI,
JI N H . C H O I , JI N- G Y UN K I M AND AK I MI K KOL A
7 Gamification and the marketing of agricultural machinery 77

SU RAJ JA I SWAL, ANSSI TARK I AI NE N, TUHI N CH OU DH U RY,
JU SSI S O PA NE N AND AK I MI K KO LA
8 Added value from virtual sensors 90

JA N N E H E I KK I NE N, E MI L K URVI NE N AND JU SSI SOPA N EN
9 The technical-business aspects of two mid-sized

manufacturing companies implementing a joint
simulation model 102
M AN O U C H E HR MO HAMMAD I , K ALLE E LFVEN GR EN,
Q A SI M K H AD I M AND AK I MI K KO LA
PART III
Capturing customer value and user experience 119
10 Implementing digital twins to enhance digitally extended
product-service systems 121
I LK K A D O N O GHUE , LE A HANNO LA AND ANTT I SÄ Ä KSV U OR I
11 The expected benefits of utilizing simulation in

manufacturing companies: insights from a Delphi study 132
K A LLE E L F VE NGRE N, MANO UCHE HR MO HAM M A DI,
V I L LE K ALLI O LA AND LE A HANNO LA
12 Integrating the user experience throughout the product

lifecycle with real-time simulation-based digital twins 147
Q A SI M K H AD I M, LE A HANNO LA, I LK K A D O NOGHU E,
AK I M I K KO L A, E SA- P E K K A K AI K KO AND TE RO H U KKATA IVA L
PART IV
Value for business 163
13 The digital twin combined with real-time performance
measurement in lean manufacturing 165
M I RA H O LO PAI NE N, JUHANI UK KO, MI NNA SAUN IL A ,
TE RO R AN TALA AND HANNU RANTANE N
Contents vii
14 Using real-time simulation in company value chains and
business models for value creation 177
M AYA K RI STI NA CHE I K H- E L- C HABAB, O LLI K UIVA L A IN EN,
U L F R . A N D E RSSO N, RO O PE E SKO LA AND AK I MIKKOL A
15 Sustainable competitive advantage through the

implementation of a digital twin 196
J U H AN I U K KO, TE RO RANTALA, MI NA NASI RI AN D M IN N A SAUN IL A
16 Managing digital-twin lifecycle –recognition and handling

of business risks 213
T E RO R AN TALA, MI NNA SAUNI LA, JUHANI UK KO, A KI M IKKOL A ,
J U H A KO RT E LAI NE N AND AK HTAR ZE B
Index 224
Illustrations
Tables
1.1 Suggestions for future research 8
2.1 Information of the data collection process 18
3.1 Survey items 34
3.2 The role capabilities in considering digital as real-time
activities among manufacturing companies (N = 116) 37
4 .1 Cluster analysis results 46
4.2 The means of the sustainable value dimensions in
each cluster 47
4.3 Descriptions of the clusters based on size, maturity, and type
of business 48
5.1 Interviewed companies, their main products and services,
number of interviewees, and interview dates 55
9.1 Major parameterized components/specifications for the two
case models –each has a certain number of values that users
can select 110
9 .2 The challenges found and recommended solution procedures 116
10.1 Digitalization framework for digitally extended PSS
and SCPS 126
1 0.2 Case company averages based on the adapted framework 128
11.1 The Delphi panelists 135
11.2 The developed Delphi process 136
11.3 The typical goals the companies are hoping to gain from
simulation modeling 137
11.4 Benefits emerged or expected because of the simulation
models 138
11.5 Resisting forces against the simulation functions/efforts
in the companies 139
11.6 Suggestions for business-related achievements of using
simulation in the long term 141
1 6.1 Process of empirical data gathering 219
16.2 Business risks related to digital twin lifecycle 221
List of Illustrations ix
Figures
1 .1 Sustainable value creation with real-time simulation and digital twins 6
2.1 Product lifecycle management framework (modified from
Donoghue et al. 2018b) 16
2.2 Industrial needs for product lifecycle 1 –Product in Portfolio 20
2.3 Industrial needs for product lifecycle 2 –Delivered Instance 21
2.4 Industrial needs for product lifecycle 3 –Instances in
Operation 22
3.1 Research model: capabilities affecting the contribution of
manufacturing companies considering digital as real-time
activities 33
3.2 Manufacturing emphasis on real-time activities 36
3.3 Level of capabilities in manufacturing companies 36
5.1 Selling digital twins in B2B markets showing the levels of
customer and digital-twin understanding required as well as
ecosystem complexity 56
5.2 Selling digital twins in B2B markets showing the levels of
customer and digital-twin understanding required as well
as ecosystem complexity from the perspectives of the case
companies both now and in the future 57
6.1 Data-driven models and their potential uses and benefits and
accessibility 72
7.1 A design algorithm to build a parameterized multibody model 80
7.2 Gamification algorithm employed in this study 83
7.3 Real-time tractor simulation model in a deformable sand field
environment 84
7.4 The gamified graphical user interface of the tractor model
showing the restricted field of view for the driver 84
9.1 The traditional and proposed product development approaches
in a B2B venture: (a) traditional and (b) proposed joint
real-time-simulation-based product development 105
9.2 Assembling two models, each with various component/
specification options, to construct a joint simulation model –
the check marks in the figure show which types were selected
for this particular simulation 106
9.3 Parameterization procedure 106
9.4 A user interface constructed in Excel –users can easily select
their intended parameters/specifications 107
9.5 (a) The harvester crane system showing the crane mounted on
the truck trailer, (b) the tractor with its trailer 107
9.6 The location of the connection spot (Point A) between two
models 111
x List of Illustrations
9.7 Frog-leg stabilizers to prevent the main-booms, the cabin, and
the trailer from falling down to the right and to the left 111
9.8 Schematic of the procedure on how two models can be
assembled and joined together 113
9.9 The process of constructing the joint simulation model
comprising several sub-systems –sub-systems are specified
using the parameterization technique 114
10.1 Intelligent PSS 129
12.1 Methodology to enable UX integration into the product life
cycle using multibody virtual and physical spaces of a
digital twin 152
12.2 UX-driven product development of a 3W, 2.0-ton, EVOLT 48
counterbalance forklift using multibody real-time simulation 156
12.3 Accelerating the marketing process of the 3W, 2.0-ton,
EVOLT 48 forklift with the introduction of a multibody
simulation model 158
13.1 The advantages of the digital twin and real-time performance
measurement to company’s stakeholder 170
13.2 The advantages of the digital twin and real-time performance
measurement to the performance of the process and the
company 173
14.1 Virtual environment (Mevea, 2018a, 2018b, 2018c) 183
15.1 Model of a digital-twin implementation 200
Contributors
Ulf R. Andersson is a professor at Mälardalen University, Sweden, and Adjunct

Professor at BI Norwegian Business School. His research focuses on subsid-
iary evolution, knowledge governance and transfer, and network theory.
Maya Kristina Cheikh-el-Chabab is the marketing manager at Caddyboo
Ltd, Finland. Maya participated in assisting some research projects related to
Real-time simulation and project management at LUT by collecting data
from multinational enterprises and SMEs.
Jin H. Choi is a professor of Kyung Hee University, Seoul, and Chair of
FunctionBay Inc. and his research interests are Rigid & Flexible Multibody
Dynamics, and multi-Physics Interactions, CAE S/ W development, and
Data Driven CAE using DNN.
Tuhin Choudhury is a junior researcher at LUT University, Lappeenranta,
Finland. Currently, he is pursuing doctoral studies in the department of
Mechanical Engineering in LUT University. His research interests include
designing, modeling and simulation of rotating machines and analysis of
rotor behavior to understand the root cause of unwanted vibrations, specif-
ically, due to unbalance.
Ilkka Donoghue is a junior researcher and Ph.D. Candidate in the School of
Engineering Science at LUT University, Finland. His research is related to
intelligent product-service systems and the role they play in developing sus-
tainable business ecosystems.
Kalle Elfvengren is an associate professor in the School of Engineering
Science at LUT University, Finland. His research interests include process
development in the health-care sector, management of technology, and risk
management.
Roope Eskola is a research and development manager at Raute Corporation,
Finland. He received the Lic.Tech in paper technology in 2015 from LUT
University, Lappeenranta, Finland.
xii Contributors
Lea Hannola is an associate professor in the School of Engineering Science at
LUT University, Finland. Currently, she is doing research on innovation and
technology management, especially on user and customer needs assessment,
digital tools in industrial settings, and business model research in the context
of product-service systems.
Janne Heikkinen works as a post-doctoral researcher in Laboratory of Machine
Dynamics at LUT. His research interests are in the fields of rotordynamics,
structural vibrations, multibody simulation, and vibration measurements.
Mira Holopainen is a project researcher in the School of engineering Science
at LUT University, Finland. Her research is related to performance meas-
urement and management as well as digital transformation of industrial
companies.
Tero Hukkataival is currently working as a manager of Testing and Prototypes
in Rocla Oy –a group company of Mitsubishi Logisnext Co. Ltd.
Suraj Jaiswal is a junior researcher at LUT University of Technology,
Lappeenranta, Finland, where he is currently pursuing the Ph.D. degree in
mechanical engineering. His research interests include multibody system
dynamics, real-time simulation, state observers, extended Kalman filters, and
vehicle dynamics.
Esa-Pekka Kaikko is currently working as CAE simulation Engineer in Rocla
Oy –a group company of Mitsubishi Logisnext Co. Ltd.
Ville Kalliola works as a project planner at Neste Engineering Solutions,
Finland, focusing on constructing and maintaining schedules for the
upcoming major turnaround.
Qasim Khadim is a junior researcher and doctoral candidate in the field of
machine design. His current research interests include real-time simulation
of multibody systems, user experiences, and digital product processes.
Jin-Gyun Kim is an assistant professor at Kyung Hee University, Seoul. His
research interests are computational dynamics and vibration, especially
linear/nonlinear model reduction, data-driven approach, and virtual sensing.
Kirsi Kokkonen is a post-doctoral researcher in the School of Engineering
Science at LUT University, Finland. Her research interests include, e.g.,
industrial service development and service business models, value networks
and business ecosystems, and entrepreneurship.
Juha Kortelainen is a principal scientist and principal investigator at VTT
Technical Research Centre of Finland Ltd., Finland, on the AI-aided systems
engineering research team. His recent research work has focused on data,
information and knowledge management, and knowledge engineering in
engineering design processes.
Contributors xiii
Olli Kuivalainen is a professor of International Marketing and Entrepreneurship
at LUT University School of Business and Management, Finland. His
expertise covers broad areas of international business, marketing, and entre-
preneurship and their interplay, also with advancement of technologies.
Emil Kurvinen works as a post-doctoral researcher at LUT University. His
research interests are rotating machines, especially high-
speed machines,
digital twins, and freeze crystallization.
Aki Mikkola is working as a professor in the Department of Mechanical
Engineering at LUT University, Finland. His major research activities
are related to flexible multibody dynamics, real-time simulation, rotating
structures, and biomechanics.
Manouchehr Mohammadi is a junior researcher at LUT University, Finland
where he is currently a junior researcher. His research interests include the
design of real-time simulation models and multibody system dynamics.
Mina Nasiri is a post- doctoral researcher at LUT University, School
of Engineering Science, Department of Industrial Engineering and
Management, Finland. Her research interests lie in the area of digitaliza-
tion, digital transformation, performance measurement and management,
operations management, and sustainable strategies.
Grzegorz Orzechowski is a post-doctoral researcher at LUT University and
Senior Developer at Mevea Ltd. His research interests are Flexible Multibody
Systems, Artificial Intelligence applications in Mechanical Engineering, and
Real-time Simulations.
Jorma Papinniemi is a senior lecturer and project manager in the School of
Engineering Science at LUT University, Finland. Currently, Mr. Papinniemi
is participating in research and development projects related to development
of a digital product-service platform for manufacturing SMEs.
Tero Rantala is a post-doctoral researcher at LUT University, School of
Engineering Science, Finland. His current research focuses on performance
management and measurement of university–industry collaborations.
Tuija Rantala works as a senior scientist at VTT. Her main research interests
are related to new business creation, innovation development, and business-
to-business (B2B) sales.
Hannu Rantanen is a professor of Industrial Management at the LUT
University. His research concentrates on performance measurement and
management in the private and public sector, and cost management in
industrial enterprises.
Minna Saunila is a senior researcher at LUT University, School of Engineering
Science, Department of Industrial Engineering and Management, Finland.
xiv Contributors
Her research covers topics related to performance management, innovation,
service operations, and sustainable value creation.
R. Scott Semken is a senior researcher at the LUT University School of
Energy Systems Department of Mechanical Engineering, Finland, working
in the Laboratory of Computational Mechanics.
Jussi Sopanen is currently serving as a professor in Machine Dynamics at
LUT University, Lappeenranta, Finland. His research interests are in rotor
dynamics, multibody dynamics, and the mechanical design of electrical
machines.
Iines Suninen works as a project manager at LUT-University. Background is
B.Sc. in Business Law.
Antti Sääksvuori is a management consultant at Krios Business Consulting
Oy, Finland, focusing on product lifecycle management, product manage-
ment, product and portfolio strategies, product innovation, and service
development and productization.
Anssi Tarkiainen is an associate professor (tenure track) in Digital Marketing
and Director of the Viipuri Lab in LUT School of Business and Management,
Finland. Overarching theme in his research is human behavior and decision-
making of individuals and groups, which he has studied in the contexts of
consumer behavior sales management, and strategy.
Juhani Ukko is a senior researcher at LUT University, School of Engineering
Science, Department of Industrial Engineering and Management, Finland.
His current research focuses on performance measurement, operations man-
agement, digital transformation, digital services, and corporate sustainability
performance.
Akhtar Zeb is a research scientist at VTT Technical Research Centre of
Finland Ltd., Finland. His current research work relates to engineering
knowledge management, semantic data modeling, data harmonization, data
management of digital twins, and applications of AI and machine learning
in engineering design.
1
Creating value with sustainable
production based on real-time
simulation
Minna Saunila, Juhani Ukko, Janne Heikkinen,
R. Scott Semken and Aki Mikkola
1.1 Introduction
There has been shift away from technology-driven design and production
toward sustainable value creation (Kaewunruen & Lian, 2019; Ukko et al., 2019).
Traditionally, product and service development decisions have been made by
experts tasked with directly addressing development issues.Their decisions have
been based, for the most part, on relevant technical aspects. The focus, however,
is moving away from purely technical aspects and moving toward enhancing
the user experience and customer value. To address this trend, many manufac-
turing companies are reconsidering and re-engineering their existing product
processes so they can become more competitive.
Advanced and persistent usage of key enabling technologies will be funda-
mental to success, and as the new enabling technologies are implemented to
provide future products and services, user and customer needs must be better
addressed and increasingly fulfilled (cf., Jones et al., 2020; Ukko et al., 2020).
Accordingly, product processes must be reconsidered so the broader spectrum
of stakeholders –beginning with supply, encompassing all internal organiza-
tional functions, the user and ending with aspects of recycling or disposal –are
closely engaged (Kokkonen et al., 2020; Nasiri et al., 2020). The critical task is
to develop the necessary techniques and toolsets needed in design and manu-
facturing to enable new sustainable business opportunities.
Often, new products embedded with innovative digital solution functional-
ities such as Internet of Things (IoT) are verified and validated by building and
testing prototypes. In general, the prototyping process includes detailed design,
parts procurement, prototype assembly, verification and validation testing,
results assessment, and redesign. Each step in this process consumes time, which
delays the commercialization of new innovations, and money, which results
in more expensive product development in which customer needs may not
be completely fulfilled. On top of wasting time and money, in many cases the
manufactured prototypes cannot be used, as such, in follow-on prototyping,
which contradicts the idea of sustainable production. New digital approaches
for the design, prototyping, and testing of new machines make it possible to
2 Minna Saunila et al.
account for human-interaction and customer needs early on in new product
development. Getting the earliest possible feedback from the end user or any
other stakeholder promises to significantly reduce costs while increasing sus-
tainability in product and production processes and providing more configur-
able product families for multiple market niches (cf., Tao et al., 2019; Zhong
et al., 2015 Zhou et al., 2020).
Digital design methods have been available and in use for decades. The
computer-aided design tools have been available since the 1960s. The develop-
ment of digital design tools has progressed from clumsy 2D blueprints to real-
istic 3D models that can enhance, for example, studies of manufacturability and
assembly in engineering development and not on the factory floor.
Another level of advancement was achieved when static objectives were
combined to form systems in which virtual parts could move relative to each
other and accurately simulate the real machine behaviors of actual machine
parts. It sounds simple, but on the theoretical level, this breakthrough required
a comprehensive mathematical interpretation of the complete system. Armed
with these models capable of accurately simulating real- life mechanisms,
researchers have been able to come up with more advanced and sophisticated
methods to describe the motions of the mechanisms.
Technical solutions driven by real-time simulation and digital twins based
on real-time simulation are rapidly developing, and their application, from a
technical point of view, is constantly becoming easier and more cost effective.
However, meaningfully applying digital twins requires business understanding
(Kokkonen et al., 2020; Qi et al., 2018). Digital twins based on real-time simula-
tion need to enable new business, or at least enhance existing business processes,
and therefore deliver value that is greater than the costs of their implementa-
tion. Consideration should be given to how the real-time simulation model can
deliver significant business benefits over the traditional digital product develop-
ment process. In the traditional digital product development process, there is no
real-time utilization of the digital product model and product or system and the
continuous linking of the collected information. Despite growing interest, there
is lack of research on which characteristics of digital twins based on real-time
simulation contribute to the different uses. In terms of new business opportun-
ities, the whole concept needs further development.
This chapter describes research into physics-based real-time simulation from
a business perspective and provides guidance for further studies. It addresses the
following two questions:
• What is the meaning of real-time simulation in contemporary business

practice?
• And, how does real-time simulation contribute to sustainable production?
The immediately following paragraphs present the potential of real- time

simulation in sustainable production. Then, suggestions for future research are
summarized.
Creating value with sustainable production 3
1.2 Reflections on sustainable production based on

real-time simulation
As already mentioned, digital tools enable more sustainable business operations
(Saunila et al., 2019; Ukko et al., 2019). However, to dive deeper into value
creation from digital methods, stakeholders of a company including managers,
business owners, personnel, investors, and others must understand the state-
of-art of available digital methods as well as the current company status with
respect to the use of digital methods. Prerequisites for taking full advantage
of digital tools include knowing and understanding existing capabilities and
having the required human resources, calculation power, and software licenses.
Digital models of the equipment that will be used to build value are also
needed. In modern business operations, the digital models are already a part of
the product management system. However, the digital model itself is only the
first step toward creating tangible value out of the virtual counterpart of the
physical systems.
As part of the research being reported in this book, representatives of sev-
eral Finnish manufacturing companies from different industrial sectors were
interviewed. These companies are in the frontline of taking the advantage of
simulation tools for research and development, and simulation is a big part of
their product development footprint.The company representatives interviewed
included technical experts, already well aware of the advantages of simulation,
as well as other non-technical stakeholders.These comprised business managers
and decision-makers.
The diversity in the group of company experts made it possible to explore
the bigger business perspective instead of just focusing on technical issues. The
results of the interviews are reported in the chapters of this book. The main
takeaways from the interviews were that the technical people do not have a
clear idea of how simulation can be best applied to increase customer and
company value. Moreover, the business managers and decision-makers do not
understand how much potential for value creation the digital tools really have.
It is an interesting situation that suggests there is an enormous business oppor-
tunity looming in the background.
The traditional way simulation is used as a digital counterpart of the phys-
ical system, especially in the earliest stages of product development. The
benefits of exercising digital instead of real prototypes are easy to justify eco-
nomically. However, from the technical perspective, they offer an even more
significant advantage. A digital model can be adjusted, tested, and redesigned
in a matter of hours, whereas the manufacture, testing, and redesign of a proto-
type take weeks and months. The ease with which a virtual prototype can
be manipulated encourages engineers to be more creative and promotes the
development of new innovations and methods. Innovations are naturally a
key to success in the global marketplace, therefore modern simulation tools
accelerate, both directly and indirectly, the overall sustainable growth of the
companies that use them.
Simulation tools are also being used in sales and marketing, where they are
also bringing a clear competitive advantage. The most advanced simulators fea-
ture a complete operator cockpit sitting on a motion platform, a realistic 3D
simulation model of the machine (already customized in customer colors), a
realistic model of the customer-specific environment, and a high-end graph-
ical user interface. The simulator package allows the customer or end user to
immersively and realistically operate the simulated machine and experience
its performance. Even though it seems like game play, the results of scientific
experiments and industrial feedback demonstrate that having such a simu-
lator builds trust and enhances the branding of the equipment manufacturer.
Customers can configure the simulation model enabling them to try out
different equipment options, such as motor and gearbox or other functional
accessories, before making their purchase decision.
The abovementioned use-cases are the most obvious, and simulators have
been used for such purpose in recent years. However, new business initiatives
are planning for broader use of digital tools to create even more value that
coming from product sales. The additional value can be built, for example, by
exercising simulation tools to make operations more efficient (cf., Jaiswal et al.,
2019; Khadim et al., 2020; Pan et al., 2020). Different drive cycles or maneuvers
can be simulated to define the execution of the operation for the fastest working
cycle, safest driving path, lowest fuel consumption, etc. The difficulty of such an
approach is to justify the money savings for the end user and to innovate suit-
able performance-oriented business models.
Another example of added value is the usage of digital counterparts of the
physical systems for virtual measurements and condition monitoring. Virtual
measurements are software algorithms that use measured data from the real
machinery to complete its virtual model with real-life input data.This approach
enables the virtual model to imitate the maneuvers of the actual system, and
instead of installing additional measuring sensors in the real physical machine,
the virtual model can be exploited to estimate the performance parameters
of the machinery. This is particularly interesting for measuring parameters or
details that are hard to reach due to machine geometry, are located in a harsh
environment, or are difficult to measure by other means.
Further, this approach makes it possible to perform more comprehensive
condition monitoring and fault diagnostics during the life cycle of the machine
improving its overall performance. The additional value for the end user is the
amount of received data from the system using a limited number of sometimes
very costly sensors. From the value creation aspect, the more accurate analysis
of the machine conditions and better predictability of typical failures enables
performing predictive maintenance to extend service intervals and cut direct
service costs.
If the digital models are sufficiently accurate and the virtual model functions
in real time in parallel with the actual system, the model can give the driver or
operator additional information about the machine as it operates. The simula-
tion model can estimate different physical performance indicators such as load
conditions, forces, velocities, accelerations, and mechanical durability. The add-
itional virtual data can be presented to the operator in the form of numerical
values, alarms, or warning lights via a graphical interface. Again, the additional
information is clearly valuable for the end user, yet it remains the responsibility
of the original equipment manufacturer to design a business model that results
in more customer value and subsequent added revenue.
1.3 Origins of the book

The need to take simulator-driven design and production to the next level by
developing and evaluating a number of community-based real-time simulator-
driven processes led to this writing and publication of this book. The intent
is to narrow the research gap between the technical and business aspects of
implementing the new digital toolset and clarify how this type of digital trans-
formation of industry will improve company effectiveness, increase customer
value, and maximize business potential resulting in sustainable value creation. In
addition to scholarly interest, this type of approach is relevant for policy makers
and company managers in the areas of research and development, the service
businesses, commercialization, and customer service for all stakeholders.
Therefore, despite the increased amount of research on simulator-driven
design and production, there seems to be little progress in understanding the
complexities of the subject from a business perspective. The literature strongly
suggests that this type of digital transformation of industry is beneficial, but
exactly how value will be created seems to be the black box. Accordingly, this
book tackles the questions:
• How can real-time simulation improve the effectiveness, customer value,

and business potential of production processes?
• And, how will real-time simulation help industry to be more sustainable,
more cost effective, more energy efficient, and more capable of responding
to local and global societal challenges?
These questions can be answered by encouraging a new way of looking at real-

time simulation studies.The complementary and multi-disciplinary perspectives
of the book ensure both the technical and economic viability of the solutions
provided to answer the questions.
Each chapter provides its unique view of sustainable production based
on real-time simulation, but there are common themes. By reviewing actual
industrial cases and presenting relevant academic research, the big picture is
framed from four interrelated viewpoints: the industrial need for sustainable
production, the development of game- like virtual environments, capturing
customer value and enhancing the user experience, and establishing business
value. Academic research into the interface of physics-based real-time simu-
lation and business management is multidisciplinary. Therefore, this book
provides implications to management research in areas as diverse as strategic
management, manufacturing and operations management, marketing, indus-
trial economics, and product lifecycle management. Further research will be
required to clarify the mechanisms through which sustainable value creation
can be achieved via real-time simulation and its related technologies.
1.4 Future research directions

There are clear signs that the benefit of incorporating the business perspective
into real-time simulation studies is acknowledged in practice and theory. The
chapters of this book show that real-time simulation and its related applications,
such as digital twinning, can be utilized in a variety of company operations
that not only affect its business, but also impact society at large. This book
argues that real-time simulation contributes to sustainable value creation, for
example, in terms of product development, marketing, and service businesses
(see Figure 1.1).
For example, from a macro perspective, real-time simulation and its extensions
can greatly impact sustainability performance. The research concerning real-
time simulation has mainly focused on the physical modeling of products and
production systems, where modeling refers to the process of representing a
physical entity in digital forms that can be processed, analyzed, and managed
by computers (cf., Qi et al., 2020). In addition to physical modeling, the results
of the chapters together with some prior studies show that, for example, digital
twins can be used for simulation, monitoring, diagnostics, prognostics, optimiza-
tion, and for the training of users, operators, maintainers, and service providers.
Value New business

opportunities
creation via… Marketing
Business model Service business

Supply chain
optimization
Education
Product development
Process improvement
Sustainable Real-time simulation

IoT and simulation Digital/virtual
production technologies environments
based on…
Figure 1.1 Sustainable value creation with real-time simulation and digital twins.
This book indicates that in addition to using real-time simulation for physical
assets, digital-twin technology can be applied to non-physical modeling that in
all forms can provide comprehensive support for decision-making covering a
wide range of company operations (cf.,Vijayakumar, 2020).
The chapters of this book indicate that potential benefits of digitization
are manifold and include increases in sales or productivity, innovations in
value creation, and novel forms of interaction with customers. From a the-
oretical point of view, the book significantly supports and contributes to the
expertise related to digital twins and especially real-time simulation. The book
promotes the application of real-time simulation in industry, the exploitation
of business value, and the implementation of new science-intensive commercial
innovations. However, in the future, the most significant innovations should
be combinations of physical and non-physical solutions. Consequently, future
research must understand and utilize digital twins and real-time simulation as
a complementary product or complement to physical products that can be
licensed and scaled. A novel aspect for future research is to examine different
types of solutions through a variety of perspectives. Table 1.1 offers several
topics and research questions for future research.
1.5 Conclusion
This book provides a comprehensive overview of potential opportunities and
the business value proposition related to implementing sustainable production
using physics-based real-time simulation. It offers a framework for a rethinking
and shift in mindset of how real-time simulation changes the way products are
manufactured and services are produced.
Already established as an important part of product development, the appli-
cation of physics-based real-time simulation to improve marketing and business
practices is new. This book describes the environment and offers the reader
insight, accounting for all the relevant engineering areas, into a number of
business opportunities associated with the new approach.The foundation of the
book is to establish that physics-based real-time simulation will make possible
the development of new products and services that will increase customer value
and open up new business opportunities.
The book includes views from academia and industry to offer a truly hol-
istic approach. The scientific novelty of the book is built upon the following
two premises. Entire community- based, real-time, simulator-
driven envir-
onments are developed and evaluated. And, rather than examining purely
technical aspects, the discussion focuses on enhancing user experience and
business value.
Table 1.1 Suggestions for future research
Perspective Suggestions Possible research questions
Strategic Strategy-driven How could real-time simulation and digital

management approaches to twins change strategic management
technology practices?
implementation Which information will be necessary for
Ecosystem decision-making?
formation How to manage business ecosystems around
real-time simulation and digital twins?
Performance Measuring and How to measure and manage performance
management managing with the assistance of real-time simulation
value of novel and digital twins?
technologies How could real-time simulation support
the development of performance
measurement?
Operations Tactical approaches How to facilitate operations with real-time
management of managing simulation and digital twins?
digital What kind of operational implications do
transformation the adoption of real-time simulation and
digital twins can have?
Production Digital How could real-time simulation and
planning transformation digital twins impact on the redesign of
of service production planning?
production Which are the main barriers that companies
will have to face?
Innovation and Technology-driven Are innovations in simulation created
technology transformation for identified business need, or are
management and renewal new innovations triggering new
business needs?
How to facilitate continuous business
renewal with real-time simulation and
digital twins?
Supply chain Managing digital How does the adoption of novel
management transformation technologies increase transparency and
beyond visibility in the supply chain?
organizational How could real-time simulation and digital
boundaries twins be used for the governance of the
supply chain?
Industrial New product How different solutions suit for different
marketing design with industries?
the assistance How to leverage new service business
of novel as well as generating new business
technologies models around real-time simulation and
The role of digital twins?
different types of What type of functionalities should be
capabilities connected to digital twins to use them to
generate new business?
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Part I
Industrial needs of
sustainable production
2
Identifying industrial needs
for real-time simulation and
digital twins
Lea Hannola, Ilkka Donoghue, Kirsi Kokkonen,
Kalle Elfvengren and Jorma Papinniemi
2.1 Introduction
The introduction of digital tools and technologies (e.g., real-time simula-
tion) or virtual models (e.g., digital twins) for enhancing business success
is not enough. Matching these enabling technologies to the actual needs of
users and customers is equally important. This chapter identifies and analyzes
current industrial needs to develop various digital approaches, e.g., simu-
lation models and digital twinning into the different phases of the product
lifecycle in manufacturing companies. The digital approaches and tools are
facilitators to respond to lifecycle-related requirements, e.g., sustainability of
a product, traceability, and the reusability of data and information in manu-
facturing environments.
The effective use of product and lifecycle information via real-time simu-
lation also enables faster responses to changes in customer needs and product-
service-related requirements. Simulation tools and digital twins can function
as information carriers throughout a product lifecycle. These tools can also
generate information to predict how the product will behave in its lifecycle
state. Their ability to provide information based on the physics they can digit-
alize is their strength. Product lifecycle requirements also include service-based
requirements leading to the concept of a product-service system (PSS). Another
objective of introducing new digital approaches, such as IoT technologies, is to
support customer processes to increase customer value.
Extending traditional physical products to include digital PSSs, co-creation,
and the deeper involvement of multiple stakeholders in business processes all
point to the need to reform customer and innovation processes and build rele-
vant corporate capabilities. For instance, real-time simulation technologies and
tools affect new product development processes by replacing prototype testing
with virtual prototype testing, which shortens new product development
processes and enhances accuracy.
Recent research has strongly focused on how real-time simulation or digital
twinning affect product development (e.g., Alaei et al., 2018; Donoghue et al.,
14 Lea Hannola et al.
2018a, 2019). Jones et al. (2020) have classified research papers from the last
ten years related to digital twins with respect to the product lifecycle model
developed by Stark (2015). Their results reveal that research focuses mainly on
the realization and support/use phases of the lifecycle. There are relatively few
papers that consider digital twinning across all phases.
The study by Jones et al. (2020) encourages further research to understand
the requirements of digital twins across the entire lifecycle, and to find out
whether the existing approaches from other lifecycle phases are applicable.
Further, Jones et al. argue that performing this research could lead to benefits,
e.g. reducing costs, risks, and design time; fostering innovation; and improving
general reliability and decision-making, especially in the imagine, define, and
retire/dispose phases of the product lifecycle.
Therefore, the objective of this chapter is to collect and analyze the current
needs of several industrial companies related to potential opportunities enabled
by real-time simulation and digital twinning across the entire lifecycle for their
PSSs. The data for the analysis were collected by carrying out semi-structured
interviews with representatives from nine manufacturing companies. The
results of the study are key to enabling the digital transformation of business
processes and the successful implementation of real-time simulation and digital
twin approaches across the entire lifecycle of PSSs.
The rest of this chapter is structured as follows. The next section reviews
related research on real-time simulation, digital twins, and product lifecycle
management (PLM). It also presents the research approach and data collection
methods followed by a discussion of the interview results. The final section
offers conclusions and suggests further research directions.
2.2 Real-time simulation and digital twins over the

product lifecycle
2.2.1 Real-time simulation and digital twins

In use for the past three decades, real-time simulation is not new. The challenge
has been developing simulation models that produce sufficiently accurate results.
Real-time simulation is a technology that enables the development and use of
simulation environments to model the real-world behaviors of a product solu-
tion within its operating environment in real-time. This can be, for example,
an aircraft operating in its simulated mission environment beginning with pre-
flight checks and ending with the aircraft parking in its hangar upon mission
completion.
For this model to have value, it must be capable of simulating real-world
physics as accurately as possible. The objective of real-time simulation is to
produce a precise model of a complex system and its operating environment
that represents the system’s physical behavior defined by physics equations that
describe the system and the operating environment (de Jalon & Bayo, 1994).
Identifying industrial needs 15
Simulation tools have been used widely for decades in the planning and design
phases of electrical system development, and they have played a critical role in
the successful development of a huge number of applications, e.g., from the
layout of transmission lines in large-scale power systems to the optimization of
motor drives in transportation (Bélanger et al., 2010). According to Guillaud
et al. (2015), digital real-time simulations can be used to develop models and
design new concepts or devices for various applications, prototyping and its
implementations, and teaching and training.
The concept of Digital Twins has been in the scope of PLM for about two
decades, but the language used to describe the digital twin has evolved over the
years (Grieves, 2006) as technology has advanced. The digital twin originated
in 2002 when the digital twin concept was presented at the first time by
Dr. Michael Grieves from the University of Michigan. Grieves (2019) sees the
digital twin as a model connected to its real-world counterpart so that the
digital twin and its real-world counterpart form a connected dual system that
are copies of one another. The connection between system elements can be
either one way or two way, where data or information flows back and forth.
The flow of information can come from a real-time simulation model and its
simulation environment where the operational parameters can be compared to
the real-world counterpart.
2.2.2 Product-service system and product lifecycle management

Extending traditional physical products into services has led to the concept
of the PSS. Baines et al. (2007) define a PSS as an integrated combination
of products and services where products are tangible and services intangible.
A PSS is a special case of servitization where a manufacturing company offers
value to the market with the inclusion of services defined around the core
products. This can offer a unique solution for the customer that builds value
that is difficult to copy. Typically, manufacturing companies are product based,
and they use servitization to offer complimentary services over the product
lifecycle.
PLM is a systematic approach to managing and developing products and
product-related information (Sääksvuori & Immonen, 2013). Grieves (2006)
defines PLM as an information-driven methodology that integrates people,
processes/ practices, and technologies throughout a product’s entire life
including its development, manufacture, deployment, maintenance, removal,
and final disposal. Different authors describe the product lifecycle phases using
various terms and categories. Kiritsis (2011) categorizes the product lifecycle
process into the following three main phases.
• Beginning of life (BOL) includes conceptualization, definition, and realiza-

tion processes.
• Middle of life (MOL) includes usage, service, and maintenance processes.
• End of life (EOL) includes reuse of the product with refurbishing, reuse of
components with disassembly and refurbishing, material reclamation with
and without disassembly, material reclamation with disassembly, and dis-
posal with or without incineration.
According to Terzi et al. (2010), BOL includes design and manufacturing. Design
comprises product, process, and plant design and includes several sub-actions,
such as analyzing requirements, defining concepts, doing more detailed design,
developing prototypes, and performing tests. Further, MOL includes distribu-
tion (external logistic), use, and support (in terms of repair and maintenance).
Finally, EOL is where products are retired, i.e., reverse logistics targeting recyc-
ling (disassembly, remanufacture, reuse, etc.) or disposal.
Stark (2006) has introduced two viewpoints for the product lifecycle: the
manufacturer’s view and the user’s view. From the manufacturer’s viewpoint, a
product’s lifecycle lasts from the idea of the product via its production, realiza-
tion, support, and services to its retirement. For users, a product has a “life” from
the moment they acquire it and start using it to the moment they stop using it
or dispose of it. These two viewpoints have congruent steps, but especially the
last two steps are different and not chronologically related; a user may stop using
the product, but the manufacturer still produces the product and related ser-
vices. On the other hand, the manufacturer may retire the product well before
the user disposes of it.
Donoghue et al. (2018b) have identified in their study that companies
can also have a PLM framework that includes three lifecycle phases and the
interaction between the different product layers, which need to be managed
with the different core business processes. This PLM framework is illustrated
in Figure 2.1. These three lifecycle phases are (1) product lifecycle 1, which
focuses on the existing product portfolio and developing new PSSs based on the
markets requirements (outside-in), (2) product lifecycle 2, which focuses on sell
Product
Prod
Pro duct Lifecycle
Liffecycle 1
Li Product
Prod
Pro duct Lifecycle
Liffecycle 2
Li Product Lifecycle 3
(Product
(P d ct in
Produ in Portfolio)
Porttfoli
Por lio
o) (Delivered
(Del
De iver
ivered Instance)
ed In
Insstaance) (Instances in Operation)
Market R&D Process Marketing Sell Deliver Maintain Installed Base

Process Process Process Process (Operations)
Product Lifecycle Management (PLM) to enable Product & Service Digitalization
Outside-In Inside-Out
Market Product & Service
Requirements Marketing
Figure 2.1 Product lifecycle management framework (modified from Donoghue et al.

2018b).
and deliver processes, and (3) product lifecycle 3, which focuses on maintaining
the installed base and operations.There is a marketing process between product
lifecycles 1 and 2, which focuses mainly on product and services marketing
(inside-out) to increase market awareness of the existing products and services
to the existing and new customers.
The development of shared virtual space has radically changed the way
we use information to manage products and their lifecycles (Grieves, 2006;
Tao et al., 2019). The premise that each product consists of two systems was
introduced first time in the beginning of the twenty-first century (Grieves &
Vickers, 2017). The two systems include the physical system, which has always
existed, and a new virtual system (the digital twin), which contains all product
information.
In 2006, Grieves presented an Information Mirroring Model (IM Model)
that comprises a physical space, a virtual space, the linkages between these two
spaces, and a virtual simulation space.The IM Model not only enabled the cap-
ture of information during the product lifecycle, but it also made it possible
to simulate various product actions that would be costly or even destructive
to carry out in real life. Grieves later expanded the digital twin concept via
the introduction of the Digital Twin Prototype, Digital Twin Instance, Digital Twin
Aggregate, and Digital Twin Environment. Together, these enable the application
of a data-driven approach throughout the entire lifecycle of a product (Grieves,
2019; Grieves & Vickers, 2017).
Even though digital twinning has recently attracted much attention in both
academia and companies, the concept and its industrial applications need con-
solidation (Jones et al., 2020). For example, Tao et al. (2019) argue that the
convergence of a physical product and the virtual space is still usually absent
in many companies. Jones et al. (2020) state that establishing the requirements
and realizing the benefits of digital twin solutions across the product lifecycle is
still quite challenging and should be researched in different industrial contexts.
Further research to understand the needs of digital twins throughout the entire
lifecycle should be encouraged.
2.3 Methodology
In this chapter, the research methodology is qualitative.The examination focuses
on activities occurring in the work environment and attempts to make sense of
or interpret phenomena in terms of the understanding of the workers (Denzin
& Lincoln, 2005). Theoretical and empirical knowledge is combined via case
studies (Yin, 2013).Yin (2013) defines a case study as an empirical inquiry that
investigates a contemporary phenomenon within its real-life contexts, espe-
cially when the boundaries between phenomenon and context are not clear.
The data collection method comprises semi-structured interviews with nine
manufacturing companies and the data were collected between October 2017
and March 2018. The number of interviewees from the companies varied from
two to seven. These were group interviews, and there were two interviewers
present at each session.The interviews were documented in written format, and
the key results of the interviews were summarized into separate documents and
sent to each company for review and further comment. Detailed information
about the interview participants is summarized in Table 2.1.
The objective was to identify and analyze the current needs of industrial
companies related to the potential opportunities of real-time simulation across
the entire lifecycle of their PSSs. In addition, viewpoints were collected related
to digital twinning. The interview questions were divided into four different
subject areas as follows:
• Digitalization in business and product processes

• The role and possibilities of simulation and digital twins
• The key benefits and functionalities of simulation
• Company architecture and simulation; processes, data, systems, and tools
The focus of the study was to analyze the interview results related to the digit-
alization of business and product processes and the role and possibilities of real-
time simulation and digital twins. First, the starting point for each company was
discussed, especially addressing the implementation status for real-time simula-
tion and digital twinning in their product processes, i.e., in different phases of
the product lifecycle. Second, interviewee expectations and their ideas about
the possibilities offered by the simulation tools or digital twins were collected
Table 2.1 Information of the data collection process
Company Main products and services Interviewees Interview date
Alfa Forestry and material handling 2 10 October 2017

technology and solutions
Beeta Elevators, escalators, automatic 4 23 October 2017
building doors, monitoring, access,
and destination control systems
Gamma Material handling solutions, 2 12 October 2017
attachments, and expert services
Delta Tractor manufacturer 4 22 September 2017
Epsilon Hydraulic cylinders and solutions, 1 23 October 2017
motion control, and related
services
Zeeta Machinery, systems, and technology 2 27 October 2017
for the production of plywood and
veneer
Eeta Drive technologies and solutions 11 8 January 2018
Theeta Trucks, automatic truck systems, and 3 20 March 2018
related services
Ioota Tools and tooling systems for 7 21 December 2017
industrial metal cutting, stainless
steels
and discussed focusing on the needs of the company and the nature of the
benefits these technologies could bring to the product lifecycle. The collected
data were analyzed by reviewing the interview summaries to collect all indus-
trial needs related to real-time simulation and digital twins. These needs were
grouped together based on the lifecycle phase they represent.
2.4 Results –identified industrial needs for real-time

simulation and digital twins
The results of the study revealed several industrial needs and suggested possibil-
ities related to the digitalization of product processes and the utilization of real-
time simulation tools or virtual tools and technologies such as digital twinning
or virtual-and augmented-reality technologies. The following paragraphs pre-
sent the main results based on the PLM framework presented earlier in the
related research section (see Figure 2.1). The interview results about identified
industrial needs are divided into three phases following the structure of the
PLM framework:
• Needs related to product lifecycle phase one –Product in Portfolio

(Figure 2.2)
• Needs related to product lifecycle phase two –Delivered Instance
(Figure 2.3)
• Needs related to product lifecycle phase three –Instances in Operation
(Figure 2.4).
In product lifecycle phase one (Figure 2.2), companies had mainly focused on
the R&D process phase for industrial needs. Interviewees indicated they had
already utilized real-time simulations or other digital tools to support and accel-
erate their R&D processes.Virtual testing was highlighted as a key requirement
to receive user and customer feedback as early as possible and to test virtual
prototypes, machine implements, automatic functions, and software. Further,
the need to virtually test several machines and virtually simulate its environ-
ment was also mentioned. However, it was emphasized that real-time simula-
tion models or digital twins should be developed as accurately as possible so the
most relevant data could be obtained from customers and end users.
The results also indicated that these companies have realized the value that
simulation brings to their marketing processes. Interestingly, the interviewees
did not separate marketing activities into the two different processes the PLM
framework suggests, i.e., outside-in and inside-out marketing. The collected
needs were divided into outside-in market requirements and inside-out product
and service requirements. Utilizing simulation tools was seen as important to
marketing to determine customer needs before kicking off a new product
development project and to collect feedback from the developed PSSs after
completion of the R&D process. Further, enhancing the user experience with
augmented reality (AR) and virtual reality (VR) technologies was mentioned
newgenrtpdf
Product Lifecycle 1
(Product in Portfolio)
Market Process R&D Process Marketing Process

Lifecycle marketing Customer feedback in the early phases of R&D Marketing new product-service
Collecting user and customer needs Acceleration of the R&D process, e.g., a real-time systems through simulation
through simulation models before simulator to get feedback saves time and cost - no need Lifecycle marketing
product development to travel to arrange test times Indicating e.g., energy savings for
Testing different products, parts or Fact-based R&D process customers
constructions with customers Development of virtual user interface – simulation as Testing modular parts with AR/VR
User experience in different levels in real as possible for users New IoT data-based business and
virtual environment, e.g., user Virtual testing of new prototypes, implements in lifecycle services
interface for driving experience machines, automatic functions and software
New possibilities and restrictions of Virtual testing cooperation of several machines
AR/VR technologies in testing user Detailed real-time simulation model of a vehicle, a part
experience of vehicle or an environment
Need to measure user experience Detailed real-time model enabling software testing from
the point of vehicle efficiency
Outside-In Market Requirements Inside-Out Product & Service Marketing
Figure 2.2
Industrial needs for product lifecycle 1 –Product in Portfolio.
newgenrtpdf
Product Lifecycle 2
(Delivered Instance)
Sell Process Deliver Process

Simulation as selling and marketing tool Education and training through simulation
Product showcasing Detailed real-time simulation model of a vehicle, a
Supporting buy decisions of customers part of vehicle or an environment
New opportunities of VR/AR in sell process Data gathering by IoT can open opportunities to
Tools to increase service business consult a customer, e.g., related to productivity =>
New service business models Overall efficiency
New IoT data-based business and lifecycle services Simulation of project management
Need for modularity in sales, possibility to select
between different customer solutions

Pre-order services – information and feedback about
customers as early as possible before a buy decision
Figure 2.3
Industrial needs for product lifecycle 2 –Delivered Instance.
newgenrtpdf
Product Lifecycle 3
(Instances in operation)
Maintain Installed Base (Operations)
Embedded real-time models in service business (e.g., Digital Twin – models Tools to increase service business
in maintenance, predictive maintenance and diagnostics) New service business models
Use of real-time simulation with IoT-systems (e.g. utilizing unit or product Advanced sensoring based on virtual modelling for new service models
specific data, production test results, control parameters in Digital Twin and system cost optimization
model and further refining of design and maintenance parameters) Increasing service business supporting customer´s production processes by
On-time preventive service calls optimizing them and assisting maintenance
Visualization and digital improvements in documentation of maintenance Better service availability – improved customer satisfaction
services Effective usage of resources in service business
Modernization of machines at customers sites; increasing new New IoT data-based business and lifecycle services
functionalities User experience in different levels in virtual environment
Modular subassembly/asset models for quick testing of differently
configured machines
Figure 2.4 Industrial needs for product lifecycle 3 –Instances in Operation.

as a way to further improve marketing. Interviewees suggested that a tool to
measure user experience was also necessary. In addition, the possibilities of AR/
VR technologies in enabling customers to test modular parts of a product were
highlighted.
In the product lifecycle phase two (Figure 2.3), industrial needs were divided
into sell and deliver processes. However, the interviewees brought up that
marketing and sales processes are usually seen as one entity, and the needs are
therefore difficult to distinguish from each other. Simulation tools and virtual
models were considered important additions to the sales processes, where they
could be used to further increase sales by promoting more service business.
Simulation tools were also seen as beneficial for supporting the customer buy
decisions during product showcasing, because they make it possible for the
customer to “see, test, and feel” the final product. Moreover, virtual modeling
was seen to support pre-order services, where information and feedback about
customers can be collected as early as possible before their final buy decision.
The usage of simulation tools and digital twins in education and training
was mentioned as one of the main needs in the deliver process. Simulation tools
could enhance the training process of new PSSs at customer sites. Especially,
there was a growing interest in testing AR or VR technologies for training. In
addition, the interviewees mentioned that these virtual models could also be
utilized for the digitalization and visualization of project management practices.
Interview results, however, revealed there were relatively few ideas on how
to apply simulation tools to improve the delivery process. For example, the
interviewees did not mention any industrial needs related to manufacturing
processes or production.
In product lifecycle phase three (Figure 2.4), the industrial needs focused
on operation instances, i.e., maintenance and service businesses. The use of
real-time simulation with IoT-systems adds new possibilities for utilizing unit
or product specific data, production test results, or control parameters in the
digital twin model and further refines design and maintenance parameters.
Interviewees also suggested that real-time models such as the digital twin are
needed in predictive maintenance and diagnostics, e.g., on-time preventive ser-
vice calls. Further, the use of simulation tools to enhance the visualization of
maintenance services was mentioned. Developing an online shop for mainten-
ance services to ensure better service availability is an example. Also, by opti-
mizing customer production processes and assisting in maintenance, the virtual
tools were seen as important to building the service business.
The interviewees brought up several times the need to explore the potential
of digital tools and technologies (e.g., real-time simulation), or virtual models
(e.g., digital twins) to increase their service businesses and to develop both suit-
able and sustainable business models to achieve a competitive market advantage.
The additional services for customers could be provided in each phase of a
product’s lifecycle, but the need for more holistic services was also highlighted.
The willingness to provide entire lifecycle services to support customer business
processes is an example.
2.5 Conclusions
Based on the empirical results, product lifecycle 1 is the phase where real-
time simulation solutions have already been utilized widely by industrial com-
panies, especially in R&D processes, but also to support marketing activities
before and after product development. With the fast development of digital
twin solutions, companies are beginning to accelerate existing R&D activities,
gather increasing amounts of customer data before and after the product devel-
opment, and improve marketing processes and tools.
In the second product lifecycle phase, product lifecycle 2, identified needs
were scarcer and mainly related to the sales of a product/solution rather than
to its installation. Company needs were identified, e.g., in promoting further
sales, supporting buying decisions of the customers, and training processes at
customer sites.
In the product lifecycle 3, the identified needs related mainly to improving
maintenance and monitoring services. A need to explore new service business
opportunities made available by the increasing amount of IoT data, for example,
was also expressed.
The empirical results support the previous findings from the recent literature
(e.g., Jones et al., 2020) that digital twins that cover the entire lifecycle are still
rare. One remarkable reason for this may be that digital twin solutions are still
under development in many companies; their utilization has become general in
R&D processes, and increasingly, these solutions are integrated into instances
that are in the early phases of operation. It will take time until these products
and processes are at the end of their relatively long lifecycles. Therefore, the
necessity of real-time simulation or digital twinning at product lifecycle end
may not yet be clear. Moreover, many manufacturing companies are still taking
early steps in their servitization, and PSSs and related service business capabil-
ities are still developing.
In manufacturing companies, product development is still often product-
centric, and the role of services is complementary. Congruently, PLM and real-
time simulation solutions have traditionally concentrated on physical products.
As companies are transitioning toward co- development of product- service
offerings across the entire product lifecycle, the need for digital twins to support
lifecycle services is expected to grow, as also revealed by the empirical research.
However, digitalization may still take time in many manufacturing com-
panies. One of the main concerns is associated with data ownership, i.e., who
owns the data and how and by who the data can be used. Often the up-to-date
information about the installed base is with the customer, and the information
that the manufacturer needs is spread over multiple back-end systems (e.g.,
PLM, enterprise resource planning, and manufacturing execution systems).This
makes it challenging to maintain a relevant digital twin and carry out mean-
ingful real-time simulation later in the product lifecycle. Certain companies in
the study have emphasized collecting good install base information for services,
but the information is not connected to real-time simulation models.
One of the challenges faced by all the companies surveyed is data security
and how to comply with the different data security requirements that customers
and authorities are imposing, which complicates the application of digital
twinning and real-time simulation models that represent customer instances. As
the amount of data increases in companies and in the business ecosystems, the
pressure or opportunity to utilize digital twins will increase also. This scenario
also opens even more opportunities to take advantage of real-time simulation
in business operations.
Customer needs are not divided or spread over the PLM lifecycle phases
presented in this chapter. The needs determined here are typically internal to
the companies surveyed, and they do not include the customer view directly. An
example of this is the marketing activities done before and after delivery that
could result in a continuous marketing lifecycle that supports customer engage-
ment throughout the product lifecycle. Customer needs are still collected in
a way that reflects the manufacturers’ view of the product lifecycle, which
represents an inside-out view of the market.
Interestingly, based on the survey results, there is a gap between real-time
simulation and delivery in PLM lifecycle phase 2. Although this gap was not
examined thoroughly, some initial conclusions can be offered. Real-time simu-
lation has only seen limited implementation directed at research and develop-
ment functions. There have been no production implementations. However,
opportunities available to the manufacturing engineering of new products and
service are obvious. The current lack of production implementations might
indicate that manufacturing engineering has been outsourced to partners and
suppliers, and these partners and suppliers did not participate in the survey.
This is an area where real-time simulation could offer benefits and should be
investigated in more detail in the future research.
The concepts of digital twins and real-time simulation are not established
in the companies surveyed. Many of the companies involved have invested
in real-time simulation, but the business benefits that it brings were difficult
for decision-makers to understand. The most common statement was “why
should the company invest in real-time simulation”. In general, demonstrating
the benefits seems to present a challenge. This is probably because in most
cases the focus of real-time simulation has been on product development alone.
This study encourages decision-makers and business managers to consider the
potential of digital tools and virtual models throughout the entire lifecycle of
PSSs to build relevant corporate capabilities for achieving competitive advan-
tage in the marketplace.
Acknowledgments
This study was a part of the DigiPro project and has received funding from
Business Finland and the SIM research platform (sustainable product processes
through simulation) at LUT University, Finland.The authors would also like to
thank all the involved companies for the collaboration.
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3
Company capabilities and
implementing real-time activities
Mina Nasiri, Juhani Ukko, Minna Saunila
and Tero Rantala
3.1 Introduction
With a rapid expansion in the number of businesses, real-time activities are
becoming crucial to address the developing demands of remotely located
business units such as manufacturing sites, retailers, and service centers (Oyekan
et al., 2017). Here, real-time activities are defined as different tasks that can be
handled via the collaboration of geographically separated individuals in actual
time. Real-time inventory is one example of real-time activity in manufac-
turing companies that ensures the sufficiency of stock on hand by continually
monitoring stock levels (Büyüközkan & Göçer, 2018). Monitoring production
processes remotely, providing maintenance and repair with remote access, as
well as offering online products and services are all examples of real-time com-
pany activities (Lenka et al., 2017; Lerch & Gotsch, 2015; Parida et al., 2015).
However, there is a lack of information about what capabilities are needed for
companies to successfully operate in real time.
This study contributes to filling that research gap by examining the capabil-
ities needed to implement real-time activities within a manufacturing company.
To make the right decisions, the right information must be available at the
right time for the right person in the right format (Zhang et al., 2012). This is
made possible by determining appropriate resources, strategies, and capabilities
(Büyüközkan & Göçer, 2018; El Sawy et al. 2016; Matt et al. 2015; Wu et al.,
2010). In this study, therefore, both digital business strategies and digital capabil-
ities have been presented as influential factors to achieving real-time operation.
A digital business strategy encompasses managerial capabilities and operational
capabilities (Liu et al., 2013, 2018; Ukko et al., 2019). Digital capabilities com-
prise human capabilities (Khin & Ho, 2019; Lenka et al., 2017), collaboration
capabilities (De Oliveira et al., 2019; Lenka et al., 2017), technical capabilities
(De Oliveira et al., 2019; Khin & Ho, 2019; Lenka et al., 2017; Parida et al.,
2015), and innovation capabilities (Khin & Ho, 2019; Parida et al., 2015). The
results show a statistically significant difference in the mean of digital business
strategy (managerial and operational capabilities) and two of the digital capabil-
ities (human and collaboration capabilities) for the manufacturing companies
that consider their level of real-time activity as high.
Implementing real-time activities 29
The reminder of this chapter is structured as follows. This introduction is
followed by the theoretical framework and research model, which investigates
the understanding of digital business strategy and digital capabilities, the
importance of each of those to real-time activities, and the research model.The
next section describes the experimental examination of real-time simulation
including data collection, descriptive results, and statistical analysis results. The
last section presents conclusions, which summarize the research findings and
the theoretical and managerial implications, as well as limitations and possible
further research.
3.2 Theoretical framework and research model
3.2.1 Theoretical framework
3.2.1.1 Digital business strategy
The study defines managerial capabilities and operational capabilities (Li
et al., 2018; Ukko et al., 2019) as the components of a digital business strategy.
Managerial capabilities refer to the competencies with which companies and
entrepreneurs in contemporary operation and business environments develop,
extend, and modify the way they operate their businesses (Gauthier et al., 2018).
In other words, managerial capabilities refer to the characteristics of a manager’s
behavioral abilities to be able to organize and manage resources and people
(Welter et al., 2013). Generally, managerial capabilities describe different types
of behaviors that differentiate effective from ineffective performance. They can
include motives, beliefs, and values (Anzengruber et al., 2017; McLagan, 1996).
Gauthier et al. (2018) presented that entrepreneurs’ managerial capabilities can
be classified in three categories: managerial human capital, managerial social
capital, and managerial cognition. Srećković (2018) argued that managerial cap-
abilities comprise a company’s skills, knowledge, and expertise to operate with
complex and challenging production-and management-related tasks (Choi &
Shepherd, 2004) and its capability to efficiently identify operations for the pro-
duction and distribution of products and services (Collis, 1994). For example,
managerial capabilities of IT executives can be defined as capabilities arising
from a deep understanding of company operations and its business environment
and from excellent general management skills (Bassellier & Benbasat, 2004;
Heart et al., 2010).
At the general level, and based on previous literature, the operational cap-
abilities of a company are its competencies that help the operations man-
agement system address the challenges of greatest interest to the company
and to its critical stakeholders (Dosi et al., 2003; Flynn & Flynn, 2004; Wu
et al., 2012). According to Wu et al. (2012), in the field of operations strategy,
managers introduce operational change initiatives and allocate resources to
develop new practices and capabilities to build and support competitive
advantage. In other words, operational capabilities are considered a “secret
30 Mina Nasiri et al.
ingredient” needed to develop and maintain a company’s competitive advan-
tage (Wu et al., 2010). Operational capabilities make it possible to integrate
and to direct both resources and operational practices. According to Wu et al.
(2010), operational capabilities encapsulate both explicit elements, such as
resources and practices, and tacit elements, such as expertise and leadership,
that companies must apply to find solutions for different challenges. As such,
the operational capabilities of the organizations draw on the operational
practices and resources to produce outputs and value to stakeholders in a
designed manner. They can also be considered a company-specific set of indi-
vidual routines, processes, and skills that are implemented and operationalized
in everyday workflow to promote business and build value through oper-
ational resources and practices.
3.2.1.2 Digital capabilities

Digital capabilities can be defined as the set of company capabilities needed
to support digital world activities (De Oliveira et al., 2019). A variety of com-
petencies are needed to successfully develop the requisite digital capabilities
including human capabilities (Khin & Ho, 2019; Lenka et al., 2017), collabor-
ation capabilities (De Oliveira et al., 2019; Lenka et al., 2017), technical cap-
abilities (De Oliveira et al., 2019; Khin & Ho, 2019; Lenka et al., 2017; Parida
et al., 2015), and innovation capabilities (Khin & Ho, 2019; Parida et al., 2015)
in the companies.
Human capabilities, specifically the digital skills of a company’s personnel,
are essential to the integration of digital technologies (Khin & Ho, 2019).
Substantial investment in developing the digital skills and readiness of the
workforce are required to reach a digital-competency maturity level (El Sawy
et al., 2016; Lerch & Gotsch, 2015; Parida et al., 2015).
Collaboration should also be a primary goal for any organization in
the current connected world where the competition for the acquisition of
opportunities, resources, and various capabilities is fierce. Fruitful collab-
oration can occur by sharing knowledge, resources, and work practices to
facilitate coping with the challenges of building a digital presence to support
organizational capabilities (El Sawy et al., 2016; Lenka et al., 2017; Lerch and
Gotsch, 2015).
Technical capabilities are the backbone of a company’s digitality (De Oliveira
et al., 2019; Khin & Ho, 2019; Lenka et al., 2017), which enables the inte-
gration of product and services and borderless activity (El Sawy et al., 2016).
Without the necessary technical capabilities, a company will find it challenging
to operate in real-time with up-to-date services (Parida et al., 2015).
And finally, innovation capabilities are key to transforming the traditional
way of doing business and modernizing it with new business solutions, processes,
and infrastructures (Sia et al., 2016; Xue, 2014). Digitality offers opportunities
to develop new services, which foster innovation capabilities and result in a
better ability to meet market needs (Parida et al., 2015).
3.2.1.3 Digital business strategy and real-time activities
Several researchers define managerial capabilities and operational capabilities as
the key dimensions to a digital business strategy (Liu et al., 2013; Li et al., 2018;
Ukko et al., 2019). Dynamic and informed managers may recognize the poten-
tial of novel technologies and encourage their introduction, a prerequisite for a
successful digital business strategy (Chatterjee et al., 2002; Li et al., 2018). Ukko
et al. (2019) claimed that company managers must be (1) familiar with existing
digital tools, applications, and solutions, (2) must have a clear vision of how to
utilize the digital technologies now and in the future, and (3) must build a man-
agement culture that supports the utilization of digital technologies. This can
be accomplished, for example, by introducing real-time/online sales channels,
where the only diversification into the digital world is to make products avail-
able via digital channels (Hess et al., 2016).
According to Hess et al. (2016), real-time digital activities can be fully
integrated into the firm’s core business, and they mostly affect production
processes and to some extent product and service offerings. Operational
capabilities in digital business strategies reflect a company’s proficiency in
adopting and implementing digital tools and solutions and using them as a
natural part of business processes (Benitez et al., 2018; Peng et al., 2008; Ukko
et al., 2019). In other words, in digitalized business environments, operational
capabilities reflect the planned ability to effectively execute substantive daily
operations such as manufacturing, logistics, and sales (El Sawy & Pavlou, 2008;
Zawislak et al., 2018), and to efficiently monitor/develop these operations
online.
Matt et al. (2015) argued that the scope of digital transformation strategies
is more broadly designed and explicitly includes digital activities, such as digital
technologies as part of the end-user product, at the interface with or fully
on the side of customers. They considered this meaningful in comparison to
process automation and optimization, since digital activities as strategic steps
go beyond the process paradigm and include changes to and implications for
products, services, and business models.
In summary, the managerial and operational capabilities of a digital business
strategy seem to be important to the successful implementation and utilization
of real-time activities. Therefore, the evidence from prior studies supports the
formation of the following proposition:
P1. The extent of a company’s real-time activities is a function of the

strength of its digital business strategy.
3.2.1.4 Digital capabilities and real-time activities

Real-time data tracking is crucial for contemporary companies. It makes it
possible to optimally manage production and related operations by ensuring
that the correct information is provided to the correct person at the correct
time, and in the correct form (Zhang et al., 2012).Therefore, as a crucial opera-
tive level competency for any company operating with that type of digitalized
business model, digital capabilities may play a significant role in the number of
real-time operations that a company can develop and sustain.
Human processes are considered one of the important capabilities for a
company’s digitalized business model (Arendt, 2008; Bouncken et al., 2019).
The rise of digitality calls for a workforce with greater complexity, abstraction,
and problem-solving skills (Lerch & Gotsch, 2015). One example is the autono-
mously operating production system, which demands high-level human cap-
abilities to control those systems and/or be directed by them (Fischer & Pöhler,
2018). Furthermore, Ramaswamy and Ozcan (2018) reveal that different types
of digital interfaces enable personnel to engage remotely in real-time system
environments thereby eliminating issues related to a geographically dispersed
workforce. These digital interfaces are also changing human work experiences
(Ramaswamy & Ozcan, 2018). Compared to traditional work, real-time oper-
ation requires different capabilities.
In addition to in-house expertise, companies must be able to acquire
knowledge via external collaboration to effectively digitalize operations
(Bouncken et al., 2019). In the context of digitalized product service
systems, there must be tight collaboration among manufacturing firms and
their equipment providers and customers (Lerch & Gotsch, 2015). Similarly,
Mahesh et al. (2007) propose a model for distributed collaborative manufac-
turing, where all interacting companies benefit from resource sharing and
task redistribution.
Technical readiness is also a requirement for operating in a digitalized real-
time environment. To adopt a digitalized business model, a company must be
able to utilize digital technologies comprehensively in all its operations –value
creation, value capture, and value proposition –not just for certain company
activities (Bouncken et al., 2019). One example of technical readiness offered by
Lerch and Gotsch (2015, p. 45) is “equipping products with intelligent digital
systems that allow the products to operate independently of human inter-
vention and communicate with other machines”. Accomplishing this type of
real-time, remotely controlled activity requires a sound and reliable technical
infrastructure (Lerch & Gotsch, 2015).
Finally, innovation is at the center of the digital business model, because
its successful implementation demands novel technological and organizational
innovation (Bouncken et al., 2019).
To summarize, a company’s real-time activities may require the utilization of
digital capabilities in terms of its in-house expertise, its level of collaboration,
its technical readiness, and its ability to innovate.Therefore, the following prop-
osition is suggested:
P2. The extent of a company’s real-time activities is a function of the

strength of its digital capabilities.
Digital business strategy Digital capabilities
Human capability
Managerial capability
Real-time
Collaboration capability
activities
Technical capability
Operational capability
Innovation capability
Figure 3.1 Research model: capabilities affecting the contribution of manufacturing

companies considering digital as real-time activities.
3.2.2 Research model

The research model was developed based on the reviewed studies in the con-
text of company real-time activities. Operating in real time is considered one of
the important digitally enabled activities in manufacturing companies, which
makes it crucial to study the capabilities required to implement real-time activ-
ities. As demonstrated in Figure 3.1, survey results revealed that a manufac-
turing company must have a digital business strategy and the necessary digital
capabilities to successfully carry out real-time activities. The digital business
strategy must include two determinant capabilities: managerial and operational.
The digital capabilities must include human expertise, collaboration, technical
ability, and innovation.
3.3 Empirical examination of real-time simulation
3.3.1 Data collection and sample

The data were gathered using a survey questionnaire of small-and medium-
sized enterprises (SMEs) that operate in the manufacturing sector in Finland.
The questions were addressed to managers. As shown in Table 3.1, real-time
activities were scored based on a 7-point Likert scale, in which 1 corresponds
to “strongly disagree” and 7 corresponds to “strongly agree”. The respondents
were also asked if “In our company, digitality refers to operation in real-time”.
An effective digital business strategy must include managerial capabilities
and operational capabilities. Each of these were measured based on the three
items listed in Table 3.1. Four digital capabilities are also essential. As shown in
Table 3.1, these include human capabilities (3 listed items), collaboration cap-
abilities (3 items), technical capabilities (4 items), and innovation capabilities
(3 items). Respondents were asked to assess the degree to which they would
Table 3.1 Survey items
Themes Items Scale References
Digital business strategy

Managerial Our company’s management is From 1 to 7 Liu et al. (2013);
capabilities familiar with digital tools. (strongly Li et al. (2018);
Our company’s management disagree Ukko et al.
has a clear vision of utilizing to strongly (2019)
digitality in the future. agree)
Our company’s management
supports the utilization of
digitality in our company.
Operational Utilizing digitality in internal From 1 to 7 Benitez et al.
capabilities processes has become an (strongly (2018); Hess
important part of our disagree et al. (2016);
business. to strongly Peng et al.
Digitality is a natural part of agree) (2008); Ukko
our business. et al. (2019)
Digitality enhances our
business.
Digital capabilities
Human Digital skills development is From 1 to 7 El Sawy et al.
capabilities supported and promoted in (strongly (2016); Khin
our company. disagree and Ho (2019);
Our employees are well trained to strongly Lerch and
in digital tools usage. agree) Gotsch (2015);
Digitalization of the operating Parida et al.
environment is easily (2015)
accepted by our employees.
Collaboration Digital cooperation is made From 1 to 7 El Sawy et al.
capabilities with other companies. (strongly (2016): Lenka
Digital channels are used to disagree et al. (2017);
share information with other to strongly Lerch and
companies. agree) Gotsch (2015)
Digitality transforms the shape
of social relationships in our
business.
Technical Digitality increases the value of From 1 to 7 De Oliveira
capabilities our products or services. (strongly et al. (2019);
Digitality enables the disagree El Sawy et al.
integration of products and to strongly (2016); Lenka
services into our company. agree) et al. (2017);
Digitality enables up-to- Parida et al.
date, location-independent (2015)
services for our customer.
Digitality allows us to work
across boundaries of time,
place, or activities.
Table 3.1 Cont.
Themes Items Scale References

Innovation Digitality enables innovations From 1 to 7 Khin and Ho
capabilities and new ideas in our (strongly (2019); Parida
company. disagree et al. (2015);
Digitality forces us to develop to strongly Sia et al.
new solutions. agree) (2016); Xue
Digitality helps to produce new (2014)
products and services.
Real-time In our company, digitality refers From 1 to 7 Lerch and
activities to operation in real time. (strongly Gotsch (2015);
disagree Parida et al.
to strongly (2015)
agree)
agree or disagree with the each of the statements listed in the table by selecting
a number from 1 to 7 (1 = strongly disagree, 2 = disagree, 3 = slightly disagree,
4 = neither agree nor disagree, 5 = slightly agree, 6 = agree, or 7 = strongly
agree).
3.3.2 Descriptive results

Responses were received from 116 companies. Of these, 64 percent were small
(less than 49 employees) and the rest (36 percent) were medium-sized (between
50 and 249 employees). Two-thirds of the respondents had less than 50 years
of experience in their business. One-fourth had over 50 years of experience.
The majority of respondents (93 percent) were business-to-business firms. The
remaining 7 percent were business-to-consumer.
Figure 3.2 illustrates the degree to which the surveyed manufacturing com-
panies emphasize real-time activities. A high percentage (66 percent) were
companies that believe digitality means operating in real time (mean of 6–7 on
the 1–7 scale). Only 34 percent believe that digitality has not resulted in real-
time activities within the company (mean of 1–5.99 on the 1–7 scale).
Figure 3.3 illustrates the level of capabilities established by the results for
the surveyed Finnish manufacturing companies. Three levels have been defined
including low (mean of 1–3), medium (mean of 3.01–5.99), and strong (mean
of 6–7). For managerial capabilities, 9 percent of companies came in at the low
level, 68 percent were at the medium level, and 23 percent were strong. For
operational capabilities, 8 percent came in at the low level, 57 percent were at
the medium level, and 35 percent were strong.
In terms of human capabilities, 8 percent of the surveyed Finnish
manufacturers came in at the low level, 80 percent at the medium level, and
12 percent at the strong level. A similar 9 percent of companies scored low
level for collaboration. However, 66 percent came in at the medium level, and
Emphasis on real-time activities
0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1
Strongly disagree Disagree Slightly disagree Neither agree nor disagree

Slightly agree Agree Strongly agree
Figure 3.2 Manufacturing emphasis on real-time activities.
Innovation capability
Technical capability
Collaboration capability
Human capability
Operational capability
Managerial capability
0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1
Low Medium Strong
Figure 3.3 Level of capabilities in manufacturing companies.
25 percent were at the strong level. For technical capabilities, 10 percent of the
surveyed manufacturing companies fell into the low level tier, 55 percent were
at the medium level, and 35 percent claimed a strong-level capability. Finally, a
small 3 percent came in at the low lever for innovation. Over half, 51 percent
were at the medium level, and 46 percent were at the strong level. Based on the
survey results, the capabilities essential to real-time operations seem to be avail-
able at a good level in Finnish manufacturing companies. Innovation, technical,
and operational capabilities received the highest marks.
3.3.3 Statistical analysis results

A variance analysis was used to discover if the level of real-time activity at the
surveyed manufacturing companies is a function of their capabilities. Both their
digital business strategies and digital capabilities were examined.
For digital business strategies, statistically significant differences were found
in both managerial and operational capabilities, which means that the makeup
of each company’s digital business strategy affects how well they can operate
Table 3.2 The role capabilities in considering digital as real-time activities among manu-
facturing companies (N = 116)
Mean F
Digital Managerial Non-real time 4.5083 13.798*

business Capabilities Real time 5.2814
strategy Operational Non-real time 4.6417 11.311*
Capabilities Real time 5.3860
Digital-related Human Non-real time 4.2583 9.647*
capabilities Capabilities Real time 4.8831
Collaboration Non-real time 4.5250 6.476*
Technical Non-real time 4.6688 4.564
Innovation Non-real time 5.2667 4.424
*p ≤ 0.01
in real time. In other words, manufacturing companies with strong managerial

and operational capabilities also enjoy a high level of real-time activity. In
contrast, companies with relatively weak managerial and operational capabil-
ities struggle to support real-time operations. These results are summarized in
Table 3.2.
In terms of their digital capabilities, also as summarized in Table 3.2, human
and collaboration capabilities (two of the four digital capabilities surveyed)
demonstrate a statistically significant effect on the level of real-time activities in
Finnish manufacturing.The manufacturing companies that have a high-level of
human expertise and collaboration capabilities are able to operate effectively in
real time. Technical and innovation capabilities do not have a substantial effect
on the level of real-time activities in manufacturing companies.
3.4 Conclusions
The aim of this chapter is to contribute empirically to the implementation
of real-time activities in manufacturing companies. In this regard, the chapter
examined the capabilities needed to implement real-time activities within a
manufacturing company. Therefore, this chapter contributes to previous litera-
ture by revealing the roles both a strong digital business strategy and digital
capabilities play in supporting a company’s real-time activities. Furthermore,
this study reveals which capabilities are most important.
3.4.1 Theoretical implications
First, this chapter reflects on prior research by introducing managerial and
operational capabilities as the required capabilities to realize a digital business
strategy for real-time operations.The results confirmed prior research (Liu et al.,
2013; Li et al., 2018; Ukko et al., 2019) that concluded that managerial and
operational capabilities are key to realizing a digital business strategy. Moreover,
the results also revealed the statistically significant effect of a sound digital
business strategy on real-time activities at manufacturing companies. These
real-time activities are mainly related to conducting every task (from designing
to delivering products or services) remotely in actual time (Büyüközkan &
Göçer, 2018; Lenka et al., 2017; Lerch & Gotsch, 2015; Parida et al., 2015).
Successful real-time operation depends on having access to the right informa-
tion at a right time in the right format (Zhang et al., 2012). An effective digital
business strategy that includes the necessary managerial and operational cap-
abilities enables this required access to the right information for manufacturing
companies.
Second, the chapter also supports previous research by reaffirming that
human expertise, collaboration, technical ability, and innovation are cru-
cial digital capabilities for real-time activity. Previous studies confirmed the
important role played by human capabilities (Khin & Ho, 2019; Lenka et al.,
2017), collaboration capabilities (De Oliveira et al., 2019; Lenka et al., 2017),
technical capabilities (De Oliveira et al., 2019; Khin & Ho, 2019; Lenka et al.,
2017; Parida et al., 2015), and innovation capabilities (Khin & Ho, 2019; Parida
et al., 2015) in forming digital capabilities.
Furthermore, the results showed the statistically significant effect of human
and collaboration capabilities, two of the four digital capabilities, on a company’s
real-time activities. Real-time activities transform the working environment
(Ramaswamy & Ozcan, 2018). In this regard, employees, as an important
element in manufacturing companies (Arendt, 2008; Bouncken et al., 2019),
should develop their capabilities, including digital skills and mindsets, for a real-
time system environment. Additionally, collaboration plays an important role
in successful real-time operations such as offering digitalized product service
systems (Lerch & Gotsch, 2015). In this regard, manufacturing companies can
benefit and learn from each other by sharing their experiences.
3.4.2 Managerial implications

This chapter gives evidence for managers of SMEs in the manufacturing sector
to help them understand how important a sound digital business strategy and
a strong digital capabilities are in establishing and supporting real-time activ-
ities. Because of its statistically significant level of importance to real-time
activity, managers of manufacturing companies should work to make their
digital business strategy more compatible with achieving real-time operation.
Furthermore, this study verified how important human and collaboration cap-
abilities are to successfully implementing and sustaining real-time activities.
Therefore, SME managers should ensure that these digital capabilities are pre-
sent as well.
3.4.3 Limitations and further research

This research was conducted in single country and analyzed based on a survey of
116 manufacturing companies, so the results come with some limitations. The
results also present research opportunities. The limitations include a possible
lack of reliability and validity. This limitation has been addressed by carrying
out a different statistical test at every step, from data collection to data inter-
pretation. The main opportunity is the possibility for other researchers to fur-
ther develop this research in multiple countries with multiple respondents. Also,
because the cross-sectional nature of the data might limit visibility to issues that
develop gradually over time, future studies could further develop this research
by collecting longitudinal data and conducting in-depth research on other cap-
abilities influential to real-time activity.
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4
Real-time simulation strategies
Implications for operational excellence
and sustainability performance
Minna Saunila, Mina Nasiri and Juhani Ukko
4.1 Introduction
A real-time simulation model is defined as “a computer model of a physical
system that can execute at the same rate as actual time” (Lee et al., 2004, p. 1441).
Therefore, real-time simulation models imitate a primary system (machinery, etc.)
by emulating its behaviors (Lee et al., 2004). To realize this similarity, it is neces-
sary for the physical system to have some characteristics such as programmability,
addressability, sensibility, communicability, associability, and the ability to mem-
orize (cf., Yoo, 2010; Yoo et al., 2010). These characteristics make it possible to
build a higher level of sustainability value compared to traditional production,
because they demonstrate high levels of data integration. It is necessary, there-
fore, to study the application of real-time simulation in industrial production. In
response, Chen et al. (2012, 2015) have presented several important sustainability
subthemes and indicators for industrial production that may be tackled by util-
izing real-time simulation.They report that the economic aspects of sustainability
performance include energy use, material consumption, waste management, prof-
itability, and manufacturing costs. The social aspects include working conditions,
the work’s impact on long-term worker health, employee turnover, the propor-
tion of permanent employees, and employee empowerment. Finally, the environ-
mental aspects include its positive impacts on climate change, sources of energy,
water quality through radiation heat transfer, water quality through solid waste,
and water and soil through acidification. (Chen et al., 2012, 2015).
On the other hand, many researchers argue that to get the best out of digital
technology, digitalization must be a strategic issue (Hess et al., 2016; Matt
et al., 2015; Ukko et al., 2019). For example, Hess et al. (2016) present that the
alignment and coordination of companies’ many strategies in the light of digital
transformation have led some researchers to argue for a digital business strategy
that combines IT with business strategy. However, this kind of strategy usually
consists of a company’s vision for future digital business models while ignoring
guidelines on the actual transformational steps (Hess et al., 2016). Another
stream of researchers highlight a stand-alone digital transformation strategy that
signposts the way toward digital transformation and guides managers through
Real-time simulation strategies 43
the transformation process resulting from the integration and use of digital
technologies (Hess et al., 2016; Matt et al., 2015). These implications may also
be relevant in the context of real-time simulation. Consequently, it is essential
to determine if real-time simulation can be considered a digital transformation
strategy or whether its elements (programmability, addressability, sensibility,
communicability, associability, and the ability to memorize) can be considered
actual transformational steps. In other words, does the explicit presence and
integration of these elements in the company’s real-time simulation strategy
positively affect operational excellence and sustainability performance?
Therefore, this chapter empirically analyzes the real-time simulation strat-
egies of companies. It makes use of empirical data from small and medium-
sized enterprises (SMEs) in the manufacturing sector to test the relationship
between the strategic-level integration of real-time simulation models and sus-
tainability performance. In so doing, the chapter develops a new way of char-
acterizing real-time simulation based on the different tiers of data integration,
and of defining different real-time simulation strategies. Each of the identified
strategies is characterized by a different tier of data integration, representing
the degree of integration of the simulation model into company production
operations. The evidence showed that performance enhancement was strongly
connected to the degree of data integration within production.
The chapter proceeds as follows. First, it presents prior literature on the
contribution of real-time simulation to sustainable development. Next, the
chapter reveals the research methodologies and results from 116 manufacturing
companies. Finally, some implications of these findings for manufacturing and
operations management research and practice are presented.
4.2 Real-time simulation for sustainability
4.2.1 Characteristics of real-time simulation models

A real-time simulation model is “a computer model of a physical system that
can execute at the same rate as actual time” (Lee et al., 2004, p. 1441). In other
words, real-time simulation models simulate, in real time, the behaviors of the
systems being modeled (Lee et al., 2004). To make this similarity, it is necessary
for the physical system to have some characteristics such as programmability,
addressability, sensibility, communicability, associability, and the ability to mem-
orize (cf., Kallinikos et al., 2013; Yoo, 2010). All these characteristics require a
high level of data integration. Embedded software in a physical system enables
it with programmable characteristics so it can accept new sets of logic to adapt
functions and behavior. Standardized protocols such as IP addresses enable
addressability of physical systems, so they can individually reply to messages
sent to a group of similar devices. In combination with embedded software,
sensors give sensibility to the physical system enabling it to monitor and react
to different situations.
In transportation, for example, Google Maps can be considered a simula-
tion model that, with the support of embedded GPS chips in mobile phones,
can recognize a person’s location and propose the shortest, safest, and least
congested routes. Combining a communication network with physical-system
addressability makes the physical system communicable, enabling it to send and
receive messages. Including internal and external memory devices gives a phys-
ical system the ability to memorize, so the simulated system can record and store
generated, sensed, and communicated information.Tags, keywords, or affiliation
patterns can be set up as enablers to give the physical system associability so it
can be connected and recognized by other devices, places, and persons based on
specific shared features (Kallinikos et al., 2013;Yoo, 2010).
4.2.2 The concept of sustainability performance

Brundtland et al. (1987) have defined sustainable development as “development
that meets the needs of the present without compromising the ability of future
generations to meet their own needs”. From a company perspective, this means
considering the level of substitutability of different forms of capital such as
manufactured, natural, human, and social (Figge & Hahn, 2004). Managing sus-
tainability performance necessitates linking a company’s management of envir-
onmental and social issues with its business strategy and processes (Schaltegger
& Wagner, 2006). Therefore, sustainability performance for companies will be
determined by how well the company can carry out its daily activities while
securing its economic, environmental, and social performance (Figge & Hahn,
2004; Hahn et al., 2007).
To gain sustainability performance, companies need to pay attention to cost
awareness, quality, and flexibility. According to De Ron (1998), this requires
continuous improvement. Continuous improvement in efficiency, quality, and
flexibility makes it possible for companies to attain sustainable operations and
production (De Ron, 1998). Also, Adams et al. (2016) conclude that both oper-
ational optimization and organizational transformation must be taken into
account to develop sustainability-oriented practices and processes. Operational
optimization is doing the same things better in terms of compliance and effi-
ciency. Organizational transformation involves doing new things in terms of
novel products, services, or business models. Therefore, the current study applies
the concept of operational excellence to describe a company’s operational per-
formance and renewal capability that contributes to its sustainable value creation.
4.3 Empirical examination of real-time simulation strategies
4.3.1 Data collection

Data were collected from a survey of top SME managers in the manufac-
turing sector. To assess the six elements of real-time simulation models, survey
respondents were requested to express the degree to which they agreed with
the consequent items using a 7-point Likert scale (1 = strongly disagree, 2 = dis-
agree, 3 = slightly disagree, 4 = neither agree nor disagree, 5 = slightly agree,
6 = agree, 7 = strongly agree). The items were as follows:
• In our company, all the devices are programmable.

• In our company, all the devices can be uniquely identified.
• In our company, all the devices are aware of the respond to changes in their
environment.
• In our company, all the devices can send and receive messages.
• In our company, all the devices can record and store all information.
• In our company, all the devices can be identified with other devices, places,
or people.
Items included in the survey were identified from prior literature and adapted
as required by the researchers. Sustainability performance was assessed by asking
respondents to evaluate the success of their company over the last three years
with respect to three dimensions of sustainability: financial, social, and environ-
mental. In addition, operational excellence was assessed by asking respondents to
indicate their company’s operational performance and renewal capability over
the last three years. The response scale for the items of sustainability perform-
ance and operational excellence ranged from 1 to 4 (1 = weak, 2 = satisfactory,
3 = good, 4 = excellent). For classification purposes, the survey included items
related to company size (number of employees and revenue), maturity (years
established), and type of business (business-to-business or business-to-consumer).
The survey received 116 responses. To evaluate non-response bias, responses
to all study items were compared for early-wave versus late-wave respondents.
According to Armstrong and Overton (1977), late-wave respondents can be used
as representatives for non-respondents. There were no significant differences
found between the early-wave and late-wave respondents, which suggest that
non-response bias are not likely to exist in the data.
Responding companies included raw material, component, and final product
manufacturers in different industries such as forest, metal, food, plastic, and
machinery. Responding companies ranged in size from 49 or fewer employees
(64% of sample) to over 50 (36% of sample). Median company size was 31
employees. Only 9% of the responding companies had been in operation less
than ten years. The majority of the companies (65%) had operated over 10 but
less than 50 years, whereas the remaining 27% of the companies had operated
more than 50 years. Median company age was 34 years. The majority of the
surveyed companies operate in business-to-business markets (93% of sample),
and only 7% operate in business-to-consumer markets.
4.3.2 Cluster analysis results

To identify possible strategies for utilizing real-time simulation in the context
of industrial production, cluster analysis was employed to group the companies
Table 4.1 Cluster analysis results
Elements of real-time Mean

Simulation
Overall Cluster 3 Cluster 1 Cluster 2
(n = 116) (n = 32) (n = 33) (n = 51)
Programmability 3.39 5.66 3.82 1.75

Addressability 4.15 5.53 5.15 2.65
Sensibility 3.05 4.94 3.00 1.94
Communicability 3.03 5.50 2.79 1.67
Associability 3.08 5.34 3.06 1.69
The ability to memorize 3.15 5.41 3.03 1.78
into homogenous categories. The clustering was performed based on the tiers
of data integration, that is, specifically how programmable, addressable, sensible,
communicable, associable, and memorizable the companies’ real-time simulation
models are. Cluster analysis refers to a method of classifying objects with similar
attributes into groups (Hair et al., 1998). In this study, the K-means clustering
method was used, because it is suitable for grouping based on conceptual issues.
K-means cluster analysis was used to divide companies into groups based on
the tier of data integration within real-time simulation models. Responses to
the items on the six elements of real-time simulation were used to perform the
clustering, i.e., to sort the 116 cases into the three different real-time simulation
strategies (Table 4.1). For example, responding companies that were in the top
level of data integration within the real-time simulation model were classified
as companies that follow a “data wisdom” strategy. Their real-time simulation
models were highly programmable, addressable, sensible, communicable, associ-
able, and memorizable. Companies who reported high integration levels in pro-
grammability and addressability were categorized as following an “in the game”
strategy. However, the level of data integration was below average in terms of
sensibility, communicability, associability, and the ability to memorize. Finally,
companies that reported low levels of integration in all the elements of real-
time simulation models (programmability, addressability, sensibility, communic-
ability, associability, and the ability to memorize) were labeled as companies that
follow a “bystander” strategy.
4.3.3 Characteristics of the real-time simulation strategies

The three tiers of data integration representing “data wisdom”, “in the game”,
and “bystander” strategies were tested using analysis of variance to identify
significant differences between their levels of improvement for sustainability
performance and operational excellence.Table 4.2 shows there were several sig-
nificant differences (p < 0.1) between the three different real-time simulation
strategies. Further, Table 4.3 shows the descriptions of the companies following
each strategy. The information provided in these two tables is used to describe
the characters of the companies following each strategy.
Table 4.2 The means of the sustainable value dimensions in each cluster
Performance dimensions Mean
Overall Cluster 3 Cluster 1 Cluster 2 Sig.

(n = 116) (n = 32) (n = 33) (n = 51)
Operational excellence
Renewal 2.67 2.94 2.78 2.43 0.005*
Operational performance 2.79 2.97 2.84 2.67 0.089*
Sustainability
performance
Financial sustainability 2.71 3.03 2.63 2.59 0.080*
Social sustainability 2.93 3.00 3.03 2.84 0.352
Environmental sustainability 2.84 2.84 2.88 2.84 0.967
*p ≤ 0.1
4.3.3.1 The “data wisdom” strategy

Of the companies surveyed, 27.6% carry out the “data wisdom” strategy.
The companies following this strategy with the highest levels of data inte-
gration outperform other companies in terms of operational excellence (both
renewal capability and operational performance) and financials, one of the three
dimensions of sustainability. A similar statistically significant difference in com-
parison to other strategies was not found with respect to the social and environ-
mental dimensions. This cluster comprises mostly small companies and young
companies that have been in operation for less than 30 years.
4.3.3.2 The “in the game” strategy

The “in the game” strategy is followed by 28.4% of the companies surveyed.
Companies following this strategy also performed above average in terms of
operational excellence (both renewal capability and operational performance).
However, companies following this strategy did not outperform in terms of the
financial, social, and environmental dimensions of sustainability performance.
Medium-sized companies are more represented in this group. A large portion of
them have been in operation more than 30 years, and the companies are more
mature than the average surveyed.
4.3.3.3 The “bystander” strategy

The remaining 44% of the surveyed companies embrace the “bystander”
strategy. These represent the lowest level of data integration, and they per-
form worse than average considering all the studied performance dimensions.
Medium-sized companies are also more represented in this group. Having been
in operation more than 30 years, the “bystander” companies are more mature
than the average surveyed company.
Table 4.3 Descriptions of the clusters based on size, maturity, and type of business
No of employees All Cluster 3 Cluster 1 Cluster 2

(n = 32) (n = 33) (n = 51)
No % No % No % No %
Small 62 53.45 19 59.37 17 51.52 26 50.98
Medium 54 46.55 12 37.50 16 48.48 24 47.06
Missing 0 0.00 1 3.13 0 0.00 1 1.96
116 100.00 32 100.00 33 100.00 51 100.00
Revenue No % No % No % No %
Small 67 57.76 18 56.25 19 57.58 30 58.82
Medium 49 42.24 14 43.75 14 42.42 21 41.18
Missing 0 0.00 0 0.00 0 0.00 0 0.00
116 100.00 32 100.00 33 100.00 51 100.00
Maturity No % No % No % No %
below 30 years 42 36.21 16 50.00 10 30.30 16 31.37
above 30 years 74 63.79 16 50.00 23 69.70 35 68.63
Missing 0 0.00 0 0.00 0 0.00 0 0.00
116 100.00 32 100.00 33 100.00 51 100.00
Type of business No % No % No % No %
B2B 108 93.10 27 84.37 30 90.91 50 98.04
B2C 8 6.90 4 12.50 3 9.09 1 1.96
Missing 0 0.00 1 3.13 0 0.00 0 0.00
116 100.00 32 100.00 33 100.00 51 100.00
4.4 Conclusions: sustainable strategies for real-time

simulation
This chapter empirically analyzes the strategies used by 116 manufacturing
companies to employ real-time simulation. It takes empirical data from SMEs in
the manufacturing sector and tests the relationship between strategic-level inte-
gration of real-time simulation models and sustainability performance. In doing
so, a new way of characterizing real-time simulation based on the different tiers
of data integration is developed, thereby defining different real-time simulation
strategies.The main contributions of the chapter can be summarized as follows.
First, the analysis shows that it is possible to define real-time simulation strat-
egies that are characterized by different tiers of data integration. The most
advanced strategies include the adoption of real-time simulation models that
are highly programmable, addressable, sensible, communicable, associable, and
memorizable. Second, the comparison reveals that in terms of renewal cap-
ability, operational performance, and financial sustainability, real-time simula-
tion strategies with the lowest levels of data integration also demonstrate the
lowest levels of operational excellence. From this, it can be concluded that an
advanced real-time simulation strategy with a high level of data integration
improves the performance of a company. Third, small and young companies
seem to be more advanced than larger and more mature companies in their
approach to adopting advanced real-time simulation strategies.

The following suggestions are offered for managers implementing real-time
simulation strategies. In terms of their attitudinal and demographic properties,
SMEs fall into three categories. Implementing a comprehensive real-time simu-
lation strategy such as “data wisdom” with the highest tier of data integration is
not essential for all companies. However, it serves as an example for companies
willing to increase the level of data integration in their production operations.
Furthermore, managers can benefit from an increased understanding of the
benefits of real-time simulation when considered as a strategic issue. Adopting
real-time simulation to achieve operational excellence is justified, but it can also
more broadly provide sustainability value.
4.4.3 Limitations and further research directions

First, the survey and the data used in this analysis cover only one country. More
research will be needed to validate the results for other regions. Second, self-
reported measures were used to establish the characteristics of real-time simu-
lation models and company performance. This is a practical approach that is
widely used in collecting data, but it may come with some problems in terms
of validity and reliability. In research terms, the validity and reliability were
achieved by following an exact procedure to carry out the statistical analysis,
from data collection to interpretation. Therefore, in terms of the research, the
results can be considered valid and reliable.
This study provides some avenues for future research. First, as this study has
used quantitative data, it needs to be accompanied by qualitative and longitudinal
research providing insights into SME real-time simulation strategies. In-depth
research is required to study the additional characteristics of real-time simulation
to assist in the realization of sustainable strategies. Second, it is not clear whether
or not or to what extent the characteristics of real-time simulation models cor-
relate with different usages (learning, control, etc.).This could be a fruitful avenue
for future study. This research suggests a positive relationship between real-time
simulation and sustainability performance.Therefore, more in-depth research will
be needed on the real-time simulation-performance relationship accounting for
the mediating effect of company-level features and processes.
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5
Selling digital twins in
business-to-business markets
Tuija Rantala, Kirsi Kokkonen and Lea Hannola
5.1 Introduction
Recently, simulation- based product development has received significant
attention in scientific publications (Alaei et al., 2018). That same trend is rec-
ognizable with the deployment and popularity of the digital twin, which is
designed, e.g., to accommodate the need for cheaper and repeatable product
development (Alaei et al., 2018).The levels of maturity in digital-twin use, the
solutions used, and the definition what is understood to belong to the digital
twin concept still vary a lot across industries and among different companies
(Lee et al., 2013; Tao et al., 2019). In addition to rapid development of techno-
logical solutions enabled by digital transformation, the growing emphasis in
many industrial fields on the service-based business (e.g., Kohtamäki et al.,
2018) demands that companies develop an ability to work with their customers
to co-create value (Marcos-Cuevas et al., 2016). Therefore, to develop new
data-based innovations such as digital-twin services, companies must acquire
a new understanding of their customers and their customers’ businesses. The
digital twin, based on digital technologies, is at the core of digitalization. The
“digital twin”, “data utilization”, and “value-based sales” are currently the sub-
ject of much discussion among academics and practitioners (e.g., Donoghue
et al., 2019; Gandomi and Heider, 2015; Manyika et al., 2011; Vargo & Lusch,
2016). However, thus far, there is little formal research into these important
topics.
Previous studies do not emphasize selling digital twins in business- to-
business (B2B) markets, where it is crucial to precisely address customer need.
This chapter aims to fill the gap by combining the literature of B2B sales with
new information coming from a study on digital twinning in a manufacturing
context. In addition, this chapter of the book highlights the importance of
research related to sales and the establishment of business value through better
customer understanding.
The value that customers gain from digital solutions is different than the
value gained from their purchase of physical products. This difference affects
sales processes. Moreover, value creation for customer business is a key focus of
52 Tuija Rantala et al.
this book. By applying a sales viewpoint to digital twinning, new insights can be
provided into the value elements of the differing levels of digital-twin solution
implementation and about how best to promote the sale of these digital-twin
solutions. In fact, how to promote the sale of digital twins is the primary focus of
this chapter. In addition, the chapter reviews the level of understanding needed
to successfully implement digital-twin solutions, how much must be known
about the customers and their businesses to sell digital twins, and what kind
of challenges can emerge when selling digital twins today and what challenges
will emerge as digital twins advance to satisfy the future wants and needs of the
case companies surveyed in this study.
This chapter presents a model that illustrates the level of customer
understanding and the level of understanding of data-based solutions required
from the viewpoint of selling digital twins in B2B markets. In the empirical
study, the model was applied to six participating case companies, each working
with a different digital-twin solution. Practical examples that were revealed
during the qualitative interviews are presented.
The remainder of the chapter is structured as follows. The next section
reviews related research on digital twins, especially in the manufacturing con-
text, and digital twin sales in B2B markets. Further, the research methodology
and the results of the empirical study are presented. In the final section, research
findings are discussed and recommendations and conclusions are offered.
5.2 Theoretical background
5.2.1 Digital twins in manufacturing industry

The digital twin terminology was first introduced by Grieves in 2003. Since
then, there have been several digital- twin definitions. For example, Chen
(2017) defines the digital twin as a computerized model of a physical device
or system representing all functional features and links with the working elem-
ents. According to Madni et al. (2019), a digital twin is a virtual illustration of a
physical system that is constantly updated with performance, maintenance, and
health status data throughout the lifecycle of a physical system.
The digital twin provides several opportunities for new product and ser-
vice innovations (Tao et al., 2019; Zheng et al., 2018). In manufacturing indus-
tries, several digital-twin-enabled services have been developed related, e.g., to
fault diagnosis, real-time state monitoring, predictive maintenance, perform-
ance analysis, user management, user behavior analysis, and product-or plant-
level virtual maintenance and operation (Kritzinger et al., 2018;Tao et al., 2019;
Zheng et al., 2018). The use of the digital twin enables virtual product and
process planning, and companies are increasingly turning their attention on
how and in what ways the communication, synergy, and coevolution between
a physical product and its digital twin can lead to more innovative product
design processes (Kritzinger et al., 2018; Tao et al., 2019). Based on recent lit-
erature, digital twins are most commonly used in production planning and
Selling digital twins 53
control and condition-based maintenance. Digital-twin integration throughout
the entire product lifecycle or production system is still rare (Kritzinger et al.,
2018; Zheng et al., 2018).
The opportunities for the collection and utilization of IoT data have remark-
ably changed manufacturing company product-service systems and boosted
their transformation toward becoming service-based businesses (Rymaszewska
et al., 2017). The increasing amount of available data, gathered from machines
and manufacturing processes, offers new service innovations and business oppor-
tunities for several companies within the entire manufacturing industry (Olaf
& Hanser, 2019), e.g., in planning, project management, simulation modeling,
visualization, control systems, and automation services. However, these service
business opportunities enabled by digital twins at the ecosystem level still seem
to be scarcely researched (e.g., Zheng et al., 2018). An even less researched topic
is the selling of digital twins, the focus of this chapter.
5.2.2 Selling data-based solutions in business-to-business markets

Utilizing data in business is still relatively new for many companies. It is generally
not the result of strategic planning or management. In addition, digital business
models in several companies are unstructured (Ulander et al., 2019). Therefore,
sales forces are challenged by data-based innovations, which can be described as
opportunities that arise from business model reinvention (new data-based ser-
vices, for example). Furthermore, there may be a radical shift in selling practices,
the object for sales, and earning logics. Sales forces may face several challenges
when moving from products to value-added services, rethinking value prop-
ositions, reordering value chains, reconfiguring value delivery models, or even
when moving to different markets (Westerman et al., 2014).
Unlike traditional transactions, selling data-based solutions is in many cases
equivalent to selling value.Value-based sales is more about the offering’s poten-
tial implications for the customer’s business than about the customers’ actual
expressed needs (Terho et al., 2012). Meanwhile, the developments of emer-
ging technologies may force an increasing demand for even more effective
salespeople to carry out the value-based selling process (Marshall et al., 2012).
Furthermore, a face-to-face meeting, for example, may be difficult to arrange
if the salesperson’s capability to influence the customer’s buying process is
challenged (Adamson et al., 2012). When selling complex data-based solutions,
such as digital twins, it is important to deeply understand the customer’s
business, as well as the solution being sold. With respect to digital twins, how-
ever, the B2B salesperson’s perspective has not been properly considered in
previous published research.
Rantala et al. (2020) presented a model for understanding data-based value
sales and the knowledge needed in relation to the customer, data-based solutions,
and technologies. To be effective, the salesperson must better understand cus-
tomer processes, the customer’s business, and what customer value a data-based
solution can offer. The salesperson must understand the data-based solution
on three levels: light, moderate, and deep (Rantala et al., 2020). The model
introduced by Rantala et al. (2020) was selected as a basis for this work, because
it brings new ideas on how to sell data-based solutions. The model brings
together in a fresh way two important aspects: (1) the level of understanding
needed about the customer’s business and (2) the level of understanding needed
regarding the data-based solution.
5.3 Research methodology

In this chapter, the focus is on selling data-based solutions and innovations
based on digital twins with the main research question of the study: How can
the sales of digital twin be promoted? Two sub-questions of the study are as
follows:
• What kind of customer and digital twin understanding is needed when

selling digital twins in B2B markets?
• What kind of challenges emerge when selling digital twins currently or in
the next level of transformation?
The research methodology employed in this chapter is a qualitative case study.

The case study was chosen as a method because of its suitability for situ-
ations that include complex and multiple variables and processes (Yin, 2014).
According to Yin, case studies can be used as empirical investigations, which
examine a present phenomenon, e.g., the concept of digital twin, within its
real-life contexts (in companies), especially when the boundaries between
phenomenon and real-life contexts are not clearly apparent. In this study,
six cases were selected where the concept of digital twins from the sales
point of view was examined. The qualitative data were collected in January
and February of 2020 from 16 semi- structured theme interviews held
with representatives from 6 different companies from the areas of intelli-
gent machine control systems, software solutions, real-time simulation, and
machine engineering (Table 5.1).
The case companies all operate in B2B markets.They were selected, because
they are actively developing solutions related to digital twins. The interviews
were recorded and transcribed. The duration of a typical interview was 1–
1.5 hours, and each involved 1–4 interviewers. The semi-structured theme
interviews were chosen as the main source of empirical material, because the
study is partly explorative in nature, and the meanings of concepts needed to
be negotiated with the interviewees. The interviews went beyond customer
aspects of the digital twins to cover a broad range of themes, such as current
utilization, advantages, and challenges of the digital twins. Content analysis was
the approach to analyzing the data. Emerging main themes were grouped and
analyzed over several researcher meetings. Then, interview data were studied
from the perspectives of the model of Rantala et al. (2020).
Table 5.1 Interviewed companies, their main products and services, number of
interviewees, and interview dates
Company Main products and services Number of Interview date

interviewees
A Product data sharing software and 1 February 2020

solutions for product lifecycle
management collaboration
B Solutions for digitalizing earthmoving 4 January 2020
jobsites and robotizing earthmoving
machinery
C Data visualization and rationalizing the 4 January 2020
operative hands-on work with different
kinds of digital-twin solutions
D Tools and tooling systems for industrial 4 January 2020
metal cutting, stainless steels
E Technologies and lifecycle solutions for 1 February 2020
the marine and energy markets
F Software for digital twins and real-time 2 February 2020
simulations
5.4 Results
5.4.1 Model illustrating the level of customer and digital-twin

understanding needed from the sales perspective
The paper presents a model (Figure 5.1) that illustrates, from the viewpoint
of digital twinning, the level of understanding needed of the customer and
the data-based solution. From the salesperson viewpoint, it means the need
to increase simultaneously one’s own understanding of a customer’s sub-
processes, processes, and business as well as understanding which value-adding
data-based solution will provide the best result. The level of needed data-
based-solution understanding can be light, moderate, or deep (Rantala et al.,
2020). The model of Rantala et al. (2020) is related to data-based solutions
in general. It is not specific to digital twinning. Rather, it is an example of
data-based services for optimizing an industrial company’s operations. In this
chapter, practical examples are presented to illustrate what understanding of
the digital twin and the customer business is required to effectively sell data-
based solutions.
Selling “light” digital-twin solutions to customers is the first level in
the model. At this level, the digital-twin solutions are characterized as “light”.
They are usually light simulations of the product that are used as supporting
tools for the sales process and are not delivered to the customer or updated
afterwards. At this level, the salesperson’s existing understanding about the
Level of needed
customer •Real-time data with machine learning, etc.
and recommendations for developing
understanding customer’s (and other actors’ businesses) in
the future
Level of ecosystem complexity increases

Customer’s •Full digital version of real, e.g., factory area or
business construction site
•Data are provider/utilized/integrated in
ecosystem value chain level .
•Digital twin that is utilized in certain part of •Real-time data and implications for, e.g. ,
Customer’s the process equipment predictive condition-based maintenance
•Data are utilized by the provider company or planning of production line
process
user company – no life time data collection •E.g. Remote monitoring of system, remote
•Improving the customer’s process operating services
productivity •Data are utilized by several actors
.
•Light mock-up, e.g., powerpoint, •Monitoring certain part of the process or •Remote monitoring failures
which do not have link to reality part of the equipment in closed environment •Real-time data for predictive condition-based
Customer’s •Tool that is used by the seller in •Data are used by the provider company in maintenance planning
sub process sales phase, e.g., light simulation of their R&D •Equipment real-time monitoring for
equipment preventing unplanned shutdown
•Digital twin is not sold/delivered to •Data are utilized by certain persons (do not
the customer include precise implications from data)
Light Moderate Deep Level of needed

digital-twin
Level of digital twin complexity (diversity, real-me, life cycle, etc.) increases understanding
Figure 5.1 Selling digital twins in B2B markets showing the levels of customer and
digital-twin understanding required as well as ecosystem complexity
customer equipment and the development of the product with digital features
is usually enough.
When moving to the next level, selling “moderate” digital-twin
solutions to customers (middle column of the model), the complexity of
the digital-twin solution increases. Digital twins at this level can be used in the
customer’s process or sub-process, and they are usually utilized for providing
monitoring data on the process or equipment, e.g., for improving efficiency
and predicting maintenance needs. At this level, salespersons need a deeper
understanding of the data utilization and working principles of the digital-twin
solution as well as a better understanding of customer systems. At the customer
sub-process level, the sales team’s existing knowledge of equipment and pro-
cess is usually enough. However, when moving up to the customer process
level, salespeople need a broader knowledge of customer production lines and
processes.
Selling “deep” digital-twin solutions to customers (right column of
the model) requires real-time data from multiple sources for more extensive use
in customer production lines, factory areas, or construction sites. The wider the
utilization area of the digital twin, the more actors are involved. At the highest
level (top right in the figure), data are utilized in value chains or ecosystems,
and the customer business can be supported by advanced and integrated digital-
twin solutions that probably involve machine learning. At this level, salespersons
need knowledge of real-time data management and advanced technological
tools, such as artificial intelligence. Moreover, they must understand the value
of data to the customers’ business, the complexity of the related ecosystem, and
the role of data. This jump in complexity may demand new value propositions,
Level of needed
customer
understanding
Level of ecosystem complexity increases

Customer’s
business
Company C Company
Compan F
Customer’s
process
Company B
Company E
Customer’s Company D
sub process
Company A
Light Moderate Deep Level of needed
digital twin
Level of digital twin complexity (diversity, real-me, life cycle etc.) increases understanding
Figure 5.2 Selling digital twins in B2B markets showing the levels of customer and
digital-twin understanding required as well as ecosystem complexity from
the perspectives of the case companies both now and in the future
value co-creation with the customers, and even new business models and
earning logics. Selling digital-twin innovations at this level demands a deep
understanding of the customer, other ecosystem actors, and their businesses.
The interviewed companies are in different phases of the model presented
in Figure 5.1. The interviewed companies have been positioned according to
their current digital-twin solution, as well as future development directions
(Figure 5.2). The companies may have several digital twins, but in this study,
the focus was on a particular digital-twin solution envisioned for the future. In
Figure 5.2, the interviewed companies (A through F) are positioned according
to their current level of digital-twin-solution integration. Targeted develop-
ment directions are marked with arrows. One company (C) has two devel-
opment direction arrows. The dashed-line arrow represents a more ambitious
future scenario.
5.4.2 Challenges in selling digital twins

According to the interview results, the major challenge is to identify customer
value, i.e., what is real value for the customer, and then transform the innovations
related to digital twins to provide that value from the customer perspective. For
example, when selling data-based solutions, the sales team must listen carefully
to the customer and respond to the precise need. In general, selling services to
a traditional product company may be a challenge. Selling services involving
digital twinning may be even more difficult. To respond precisely to the cus-
tomer need, sales must understand both the digital-twin solution and the need,
in detail, to transform the voice of the customer into the outputs of the digital
twin. The sales team is facing more knowledgeable and demanding customers
than ever before, and responding by offering the value the customer is seeking
can be challenging.
With respect to selling “light” digital-twin solutions to customers,
the interviewees identified several challenges that salespeople may face. At this
stage, the challenges are associated with understanding digitalization, how it
applies to customer need, and the benefits of digital twinning. For instance,
traditional industry players may simply be resistant to change or an enter-
prise may have silos that inhibit progressive transformation. Or, customers
may have doubts about the reliability of the proposed configuration of the
digital-twin solution. Moreover, there may be confusion within the sales team
about what customers really need. Finally, challenges related to achieving and
sustaining information may emerge. One interviewee (the CEO of com-
pany A) clarified the importance of having constant reliable information flow
as follows:
If the digital twin is disintegrated, it’s worth is zero.
There might be challenges regarding responsibility ownership. For example,

who is responsible for updating the digital twin configuration and the digital-
twin information, etc. In addition, smaller companies may find it difficult
to compete with larger companies such as Siemens. Companies with more
advanced deep implementations of digital twinning may also make use of light
versions. Light versions can be used in training or in sales to present the digital-
twin concept before it is further developed with the customer.
With respect to selling “moderate” digital- twin solutions to
customers, interviewees identified several challenges related to the compati-
bility of platform, systems, and data. The customer platform may be old, com-
patibility may become a big issue, or the company infrastructure may struggle to
keep up with technological changes.There might be significant sales challenges
from customers working in traditional industries that are resistant to change.
“No digi needed” or “big brother is controlling us” are examples of comments
received from interviewees (companies B and C). Another challenge may be
that a business may be strictly standardized, which could restrict utilization
opportunities for digital-twin solutions (company B).
Lack of openness in sharing data, the incompatibility of systems, and data
integration challenges from different sources are recognized as major challenges
(companies B and C) when contemplating the implementation of the next
level of digital twinning. Digital twins for a certain part of both equipment and
process are less complex with respect to the level of diversity, real-time cap-
ability, and lifecycle data. As one interviewee (Research Scientist in company
B) stated:
Open data transformation formats and common rules are needed.

Another challenge might be that the process lines or equipment offered may be
so customer-specific that the digital twin must be modified for each sales case
(company D). With increases in digital-twin complexity, sales personnel must
learn new products and product features (company C). In addition, there may
be lack of knowledge about technological aspects or customer needs (company
D). For the next level of digital twins, for example, the sales team might present
an agile factory of the future (company D).
With respect to selling “deep” digital-twin solutions to customers,
interviewees recognized challenges related to complexity.When reaching out to
the right top corner (Figure 5.2), the digital-twin provider may face challenges
related to understanding the meaning of real-time data and find it difficult to
make the meaning clear to the customers.The availability of real-time data may
be beneficial to the provider, but not yet of perceived benefit to the customer
(company E). Moreover, the sales team may think that access by the customer
to too much detailed information about its processes may be disruptive and
result in an overly concerned customer (company E). Technical development
is continuous, and customers are making more intelligent and more complex
products and machines. The challenge is to stay on the crest of the wave and
be able to provide customers the components they need and that they are
able to model to their complex machinery (company F). As one interviewee
(Technology Director in company F) stated:
One of the challenges is that when customer models become more com-
plex and heavier, how can they be solved in real-time.
At the next level, the provider may need to develop new business models,
such as licensing models (monthly or project-based usage of DT software),
around the digital twin to make it easier to implement in a complex ecosystem
(company F). Another challenge may be model complexity. As the digital-twin
model becomes more complex, achieving real-time solutions will become
more difficult (company F). The development of virtual models takes a lot
of time and resources. The seller may use different versions of the models for
different phases. For example, a simpler version may be sufficient for a concept
phase (concept testing), but for testing final control systems a more advanced
model may be needed to get relevant information from the model (com-
pany F).
5.5 Conclusions
Based on the empirical results, the main challenges in selling “light” digital-
twin solutions are often related to the adoption of digital technological
solutions in general. Many manufacturing companies are still conservative, and
the advantages of digital twins or how to assign responsibilities for their oper-
ation may be unclear. At this level, sales team efforts should promote the added
value offered by digital twins. Using a digital twin, the physical product can be
visualized in advance, which helps in understanding how it might be received
and how it will operate in practice.
At the “moderate” level, challenges are often related to the technological fit
of the systems and interfaces or the customer’s outdated machine infrastruc-
ture that doesn’t necessarily support all the digital twin integrations. Existing
digital-twin solutions are often related to separate installations, but the target
of companies at this level is often to extend the digital-twin solutions to an
increasing number of systems and users. For the sales force, it is essential to
know the customer systems and understand the realistic possibilities for inte-
gration. For example, what installations and parts of the processes will benefit
from digital twinning? Or, what is the effectiveness or cost savings in relation
to existing solutions?
There is no point in selling “too heavy” digital-twin solutions that are
not technologically or economically feasible. The value for customer comes
mainly from the incremental improvement of its processes. Moreover, the
value and business opportunities arising from the increasing amount of data
may arouse interest in companies that are transitioning toward service-based
business.
At the “deep” level, the challenges relate to the management of complex
solutions and especially to managing the increasing amount of data. The prac-
ticalities and rules for data ownership and sharing are still underdeveloped,
and companies may be cautious about open collaboration. At this level, cus-
tomer companies are increasingly adopting service-based business logics, and
this development in product-service offerings can cause changes to their value
elements and, as a result, changes to their business models. Customer companies
are increasingly interested in providing data-based lifecycle services. This, of
course, provides opportunities for digital twinning and raises question about
how real-time simulation and digital twins could be utilized across product/
process/factory lifecycles and who could utilize the data.
The empirical results of this study support views from the existing literature
(e.g., Kirtzinger et al., 2018; Zheng et al., 2018) and also from Chapter 2 of this
book (“Identifying industrial needs for real-time simulation and digital twins”)
that digital-twin integrations across the entire product lifecycle are still scarce.
One reason for this may be that the digital twinning is a relatively new concept
for many companies, and its integration has thus far concentrated mainly on the
first steps of product lifecycles. From a technological perspective, incompati-
bility of systems and insufficient capacities are still slowing down development
in many companies. As the models become more complex, they become heavy
and more difficult to solve in real time. However, the expectation is that more
complex digital twins that also provide real-time data across the entire lifecycle
will be coming in the near future.
Moreover, data are supposed to be utilized by an increasing number of
different actors in manufacturing ecosystems. This development is not easy to
navigate, as it demands that companies adopt a new kind of openness about
sharing their data and their expertise in analyzing and using this data. From
the sales perspective, being able to provide sustainable value for customers and
selling complex digital-twin solutions not only demand knowledge of the
customer’s business, but also an understanding of their partners, ecosystems, and
future business development targets.
Empirical findings found in the literature regarding digital twins focus
mainly on technical rather than business aspects.There are relatively few studies
covering sales, B2B companies, and digital twins. This chapter gives practical
viewpoints for selling data-based solutions related to digital twins in B2B
markets. The chapter also tests and broadens the model presented by Rantala
et al. (2020) related to the level of needed customer understanding and data-
based-solution understanding associated with the sale of digital-twin solutions.
Based on these research results, the model of Rantala et al. (2020) conforms to
the general theme of selling digital twins. However, the suitability of the model
requires more testing with a larger set of case companies and industries to gen-
eralize the suitability.
This chapter is intended to help practitioners to benchmark practices in
other companies and to give feedback to managers for developing their B2B
sales function successfully in practice. The study also helps researchers visualize
how data can be applied for new innovations in a broader context including
the digital twin, B2B sales, and management. In addition, this study increases
customer understanding related to digital twins.
Acknowledgments
The authors would like to thank all the parties behind the DIGIBUZZ (Toward
Commercial Exploitation of the digital twins) project as well as Business
Finland –the Finnish innovation funding, trade, investment, and travel promo-
tion organization –for its support of this study.
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Part II
Game-like virtual
environments
6
Accelerating design processes using
data-driven models
Emil Kurvinen, Iines Suninen, Grzegorz Orzechowski,
Jin H. Choi, Jin-Gyun Kim and Aki Mikkola
6.1 Introduction
This chapter introduces data-driven models in the framework of dynamic
simulations and discusses their potential to provide additional value to original
equipment manufacturers, end-users, and other stakeholders in the value chain.
A challenge in product processes and in the product development of high-
technology products arises from gradual development through incremental
innovation, i.e., the new product or process is typically based on an earlier gen-
eration product or process. Introducing radical changes could result in legisla-
tion difficulties and would make gaining official approvals more difficult. Proof
of development and testing is usually a requirement for certification. For a
physical product, obtaining this proof is expensive and takes time. An example
would be crash testing. The complexity of heavy machinery and processes is
constantly on the rise, because new technologies are continually integrated
and interconnected. In addition, software solutions are being emphasized over
hardware solutions, so developing a new machine is not just a job for mech-
anical engineers. Today, mastery over several disciplines and related standards is
required to produce a new product and/or service.
In practice, increased complexity has led to situations in which numerous
requirements and interactions must be simultaneously considered. Standards and
quality requirements based on emerging technology approaches are becoming
more pervasive. As a result, the successful introduction of a new product is
becoming increasingly more complicated and expensive. In some scenarios,
it has been estimated that the expenses associated with product development
and other product processes make it difficult for new players to succeed. This
in turn can result in a reduction in competition and work against worldwide
economic growth.
As the product has become more complex, validation and verification via
measurement becomes more important. There are two possible ways to gain
insight into a new product. In one, the actual product is instrumented with
various sensors and measurements are taken. The benefit of this approach is
66 Emil Kurvinen et al.
that the system behavior is real and can be used for proof that the system
complies with standards. The drawbacks are the costs, in money and time,
of the testing, and that the results are case specific. Because these drawbacks
are less significant for a high-volume product, testing is an appealing in mass
production.
In the second, simulation models are used to gain insight into product per-
formance. For example, a simulation could examine the influence of various
parameters on system behaviors. The benefit of this approach is that it makes it
possible to explore different structures cost effectively even before the product
is manufactured. The drawback is that to trust the results, both the model
and the simulation must be carefully verified. In low volume and customized
products, this approach is appealing, because prototyping is no longer required
to verify performance.
Both evaluation approaches can be applied equally in building the data
models. In addition, a hybrid combination of measured and simulated data
can be used. See, e.g., virtual sensors (in this book chapter) and Kalman
filters.
Development in the use of computational models and simulations is rapidly
progressing. Product development has changed radically over recent decades
as it has become more computationally intensive (Dede et al., 2014; Kurvinen,
2016; Pyrhönen et al., 2013; Uzhegov et al., 2016). The use of computational
models and simulations has remarkably increased the efficiency of research and
development from concept design through selection of details to market release.
As explained in other chapters of this book, computational models can be suc-
cessfully used in many product processes such as marketing, service business,
and user training.
In a practical design procedure, decisions must be made regarding a multi-
tude of parameters at every stage of the design task. This is a challenge for
the designer, because design decisions significantly influence overall design
and performance. Also, because the design target is typically difficult to express
explicitly, the use of numerical optimization methods may not help to realize a
successful product or service. Due to this suboptimal exploration of design space
topologies and parameters, obtained results may be unsatisfactory. Software has
become more dominant in product development, but time-to-market demands
have remained the same or have even been shortened. Because of this schedule
constraint, software development must begin early on in the design process,
even before the first prototype is built.
To ensure the overall optimal fulfilment of needs and constraints associated
with a product, it is crucial to develop alternative tools that can extensively
support the design, use, and service of a product. To this end, this book chapter
introduces a concept based on data-driven models. In this book chapter, data-
driven models are introduced in the framework of multibody system dynamics.
Their application in product development, product use, and service businesses
are discussed.
Accelerating design processes 67
6.2 Concept of a data-driven model

Data-driven modeling is based on information and communications technolo-
gies. It is currently undergoing fast development. In data-driven models, data
are provided for use in computational intelligence and in machine learning
(ML) methods, e.g., for system design or software design purposes. These
methods feature a wide toolset that ranges from neural networks via Bayesian
networks to random decision forests. Because the data represent a fundamental
basis for decisions and conclusions, quality needs to be high and the amount
of data should be sufficient. Simulation tools are often used in current R&D
tasks, especially in high-technology products, therefore simulation models pro-
vide a basis for virtual data collection. The benefit of virtual data collection is
that radical changes can be studied and how parameters affect performance can
be determined. Moreover, this information, which can include the effects on
system behavior of faulty condition, can be stored.
With the help of advanced simulation and sensing combined with commu-
nication technologies, it is possible to collect enormous amounts of data for use
and to use this data to improve or optimize the product lifecycle. This offers
new opportunities for companies to improve existing services and to develop
new ones. In addition, advanced simulation, sensing, and communication enable
and enhance the product’s capability to sense its operational environment and
transfer that information to a central location for use in operational optimiza-
tion. For example, a manufacturer of mobile machinery can collect operational
records obtained from inboard electronics. These records can be used to opti-
mize the service needs of existing products and minimize their energy con-
sumption. They can also be used to examine safety and many other aspects in
the development of future products (Alaei et al., 2019).
In effect, new service innovations enable product-focused companies such
as the manufacturing industry to increase the share and stability of revenue and
profit, improve customer relationships by meeting the customer demands more
precisely, and increase lifecycle management performance. New innovations,
such as data-driven models, need a vast amount of data and the technology
still needs further development. However, new innovations help companies to
differentiate themselves from their competitors and strengthen their market
position as solution providers.
Product- focused companies can expand their business by offering, for
example, environmentally aware products, which are capable of producing even
more data that become useful to the market as a whole. This in turn improves
the usability of high-tech products and their lifecycle operation. One of the
problems that arises with new types of services is that customers need to accept
the collection of private data, which can be a difficult or sensitive topic for
some. How best to handle the collection of private data is still an open issue.
Although some companies have already successfully introduced data-driven
industrial services, most manufacturing companies still struggle with the actual
service innovation process of classical service development and need guidance
and case examples before evaluating the potential benefits.
In contrast to traditional industrial services such as maintenance and repair
tasks, data-driven services require advanced technology and new competencies
such as extensive IT knowledge. However, the transformation of a business from
being product-and manufacturing-centric to being more software-focused
requires innovation and new expertise. And all this must be integrated. Besides,
the field of data use in services is new for most manufacturers and adds a high
degree of complexity to the development of services, because various internal
and external stakeholders (e.g., IT departments, legal stakeholders as well as
other partners and customers) must be integrated into the process (Kampker
et al., 2018). In the following sections, the data-driven paradigm is explored in
detail.
6.2.1 System modeling

Data-driven modeling has gained popularity due to an increase in compu-
tational performance and advances in statistical and ML methods (Montáns
et al., 2019). It is applied across many science and engineering fields including
mechanical engineering (Choi et al., 2020), industrial processing, fluid and par-
ticle dynamics (Sanchez-Gonzalez et al., 2020), bioengineering, and chemistry.
Especially, in mechanical engineering the data-driven approach was adopted
recently, as the availability of data and interest in complex systems and materials
has emerged (Montáns et al., 2019).
Based on prior knowledge assumptions, models can be classified as white
box, grey box, or black box. In a white-box model, the physics behind the pro-
cess is known and the model is usually theoretically based. A black-box model
is structured based solely on system input and output data. A grey-box model is
partially theoretical and partially structured with data.
The common use of a deep neural network (DNN) promotes black-box
modeling, because it is assumed that a DNN can accurately discover depend-
encies in complex data sets (Chollet, 2018). This approach is user-friendly,
because the modeling phase can be omitted. However, it results in models that
are far from optimally efficient and with poor generalization properties. The
nonoptimal efficiencies are the result of the large number of parameters that
comprise DNNs.The grey-box approach results in a more compact description.
Nevertheless, a DNN can be optimized for a given application (by limiting the
number of layers and neurons) and can take advantage of modern computa-
tional hardware by exploiting parallel execution.
From a user perspective, the lack of generalization behind the data provided
for black-box DNN models may be problematic. In practice it means that the
model that has learned a particular system can provide reasonable response
only for that system and only for the range of inputs it was trained on. In many
practical applications this is adequate, however, to build a versatile data-driven
model of a complex system, important design choices must be made at the very
beginning. Engineers must choose what parameters must be explicitly mod-
eled and what is the range of those parameters. To model a car, for example,
the number of passengers, their weight, shock absorber stiffness, tire size, chassis
mass, etc., must be chosen in advance. For models like a car, there are thousands
of parameters to choose from. The more parameters selected, the more difficult
it is to construct a data-driven model. However, the more parameters selected
can also result in a more universal model. Nevertheless, it is feasible to modify
a neural-network-based model, and it often requires less effort and simulation
data than it does to build a model from scratch.
Recently a new network modeling approach has emerged that allows for
generalization outside of the data provided –a physics-based neural network,
i.e., network-based simulators. Such simulators use the data to directly to learn
the physics behind behaviors. Graph networks are an important family of these
methods (Sanchez-Gonzalez et al., 2020). In a graph network approach, the
system is divided into basic components such as particles, bodies, and nodes. Next,
the neural networks learn how the components interact with the environment
and with each other. A model constructed using this approach can be reused in
the simulation of a completely different system if it models the same phenomena.
Compared to a black-box approach, network-based simulators require spe-
cial modeling and training techniques to mimic the system of interconnected
components (usually in the form of a directed graph) and to learn the rules
instead of behaviors of the system. As such, network-based simulators are grey-
box systems. They have been successfully applied to model fluid dynamics and
particle dynamics phenomena, which are both known to be computationally
expensive and numerically challenging.
Data-driven models are often trained on experimental data, however, data
coming from virtual simulations are also useful. For this reason, there are three
main approaches based on data sourcing: those based on measured data, those
based on virtual test data, and those based on a hybrid approach where the
model is first trained using virtual data and then using measurement data. Using
experimental data is the most straightforward. The model is constructed based
on system measurements. However, models based solely on virtual data are also
useful, mostly because they are more efficient.
Complex systems may take days or weeks to solve, which may be imprac-
tical in many applications. Therefore, engineers often create surrogate models1
that mimic simulation models closely but are less computationally expensive.
In the hybrid approach, the model is first built using virtual data and then
updated with experimental data.This approach is profitable, because virtual data
are often easier to obtain, and experimentation costs time and money. Due to
various factors, however, a virtual model may not be sufficiently accurate. Also,
a model pretrained on virtual data requires less experimental data than when it
is training from scratch.The hybrid approach makes it possible to achieve a high
degree of accuracy with less effort.
Data-driven models also make it possible to better understand and utilize
the growing amount of raw data that is generated and collected during the
lifecycle of a modern machine. The data-driven approach extracts relationships
from the data and offers accurate system responses without relying on clas-
sical laws and equations. Frequently, the data-driven model approach results in
efficiencies that are higher than those of classical approaches. However, iden-
tifying the appropriate application is challenging, a lack of understanding of
the underlaying laws can be a drawback, and model effectiveness and reliability
are strongly case and objective dependent. Nevertheless, the data-driven para-
digm is developing rapidly and becoming widely applicable. Recent advances
in physics-based data-driven formulations will only reinforce that trend.
6.2.2 Neural-networks-based data models and other methods

The combination of ML and big data has been spotlighted as a robust tool for
data-driven modeling in science and engineering. ML can easily find patterns
in a big data set. An artificial neural network is a versatile tool with excel-
lent approximation capabilities that is often equated with the data- driven
models themselves. It can mimic arbitrarily complex systems with reason-
ably small memory requirements and limited information about the system,
and it makes the best possible use of provided data (Dreyfus, 2005). A trad-
itional neural network can be more difficult to use. Mainly due to hardware
restrictions, it usually comprises a limited number of computational units
(neurons), and to obtain a satisfactory data model, its hyper-parameters must be
properly tuned.
However, rapid computer hardware development, especially of graphics
processing units (GPUs) and tensor processing units (TPUs),2 has made pos-
sible the advent of the DNN. A DNN, which is based on the artificial neural
network with multiple hidden layers between input and output layers, enables
the handling of complex nonlinear functions with multi-dimensional input
data. A well trained neural network provides precise pattern recognition based
on data sets in real time. These features of the ML approaches, big data rec-
ognition and the real time estimation of nonlinear functions, are attractive to
dynamics and control engineers who are handling nonlinear system dynamics
applications such as railways, vehicles, gaits, robotics, tracking, etc., with real-
world data.
DNN promises to solve most problems using a more general architecture,
therefore limiting the number of hyper-parameters from which to choose
(Chollet, 2018). They also require far less data preprocessing in comparison
with earlier solutions. For example, it is perfectly fine to input raw sensor data
or raw camera image into a DNN and still expect to obtain excellent quality
output. The DNN architecture, with multiple layers, will take care of the
filtering and processing of the input data. Moreover, as ML develops, standard
network patterns and complete pre-trained networks have become available.
One of the best developed areas in the DNN community is image processing
and pattern recognition, which boast ready-made solutions trained on millions
of images that can be applied in, e.g., imaged-based control units.
However, neural networks have limited prediction capability.3 Therefore,
responses from a neural-network-based model given input far removed from
the data it was trained on may lead to unreliable system responses.
Aside from neural networks, there is a whole family of methods that can be
used to construct data-driven models of many kinds. These include support
vector machines, classification and regression trees, Naïve Bayes, and random
decision forests. These methods will not be described here in detail. Interested
readers are referred to the literature, e.g., Brunton and Kutz (2019).
6.2.3 Data-driven models in the multibody framework

The multibody framework provides methods for computationally efficient and
accurate sources of data. It enables achieving realistic behaviors under real-time
constraints so that the virtual representation of a machine behaves like the actual
machine. Depending on the objective, multibody-framework-based simulation
models can provide surrogated models of differing complexity. These can be
classified as physics-based multibody dynamics modeling for local components
(which means the nonlinear system identification) or system level multibody
dynamics modeling and simulation.
Conventionally, data-driven multibody dynamics models have been used
successfully for noise data filtering, reliable black box modeling from experi-
mental data, uncertainty quantification in a probabilistic sense, nonlinear par-
ameter identification in governing equations, etc. (Choi et al., 2020). The aim
of these data-driven approaches is system identification to construct multibody
models that accurately reflect the physics. The model for identification has
focused on local component approximation (joints, bushings, bearings, con-
tact surfaces, etc.) based on a single and/or a few points. Recently in a more
advanced approach, massive multipoint approximation based on a small number
of data points is being used in global approximation. Points from the whole
domain of interest are utilized.
System level multibody dynamics modeling and simulation is the more
interesting approach for multibody system dynamics. The robust features
of the ML approach can make it possible. Using a DNN-based surrogated
model, time-varying results such as displacement, velocity, and acceleration
can be predicted in real time without directly solving the governing equations
of multibody dynamics. Among the various DNN methods, Feed Forward
Networks, with hidden layers and nonlinear activation functions, may be the
simplest approach.
The reliability of the surrogated model mainly depends on identifying the
appropriate hyper-parameters such as the number of hidden layers, the batch
sizes, the number of epochs, the types of optimizers, etc. Consequently, well-
trained surrogated simulations based on a multibody framework can accurately
estimate time-varying system responses in real time. The approach promises
excellent potential for virtual reality, dynamics and control, digital twinning,
cyber- physical systems, etc. However, in the ML multibody approach, the
quality of the data used in the training process is critical and prerequisite for the
reliability of the trained surrogated model.
6.3 Applications of data-driven models

There are various potential uses for data- driven models. With data- driven
models, the development process becomes accessible to the broader spectrum
of stakeholders. Figure 6.1 illustrates the different areas where data models
can be employed and their potential benefits and accessibility to the broader
stakeholders.
One area where the data models can be exploited directly is in design opti-
mization, for example, of a genetic algorithm where the best combination that
fills the objective the best is identified. In addition, the data models can be
used in control design for reinforcement learning or fuzzy systems. This makes
it possible to develop control algorithms that yield the desired performance.
These are only a few practical examples. The potential of using models like
these in other applications is significant. The research is active and taking shape,
and the main focus is on identifying the cases where the value gained is high
enough to warrant implementation from the business perspective.
The data models can be at different complexity levels. On the smallest scale
a single component can be approximated with a neural network. It may be, for
example, a complex nonlinear spring-damper element, sophisticated friction
model, or some magic formula. On a larger scale, a sub-system (or complete
system) can be replaced by its surrogate. As system size and complexity increases,
it becomes more difficult to design the data model architecture, the solution
becomes less universal, and the demand for data from simulation grows. Large
systems, which are intrinsically complex, highly nonlinear, and have many more
parameters, are more difficult to accurately and efficiently solve. However, the
benefits are also greater.
New business opportunies

Accessibility
Maintenance & service
Supports sales and purchase

Enhanced operaon
Research and product development
Potenal uses and benefits
Figure 6.1 Data-driven models and their potential uses and benefits and accessibility.
The potential uses and benefits associated with data-driven models will be
discussed in more detail in the following paragraphs.
6.3.1 Research and product development

Because they can influence a manufacturing company’s competitive success,
sales, adaption, and renewal; research and product development are essential.
The R&D approach offers benefits for both the product development cycle
and the product itself. For example, good R&D results in better concept design
and material savings in the final product. These can be optimized based on data
from a larger pool of potential users than would be available using classical
marketing research methods.
This data-driven method can be used in companies that have a complex
and expensive production process. Factories that are responsible for developing
agricultural machines, for instance, apply a lot of effort and resources during the
model development process. Therefore, a tool that can minimize risks and test
machine settings before producing the first actual prototype is well received.
This is how the data-driven methods can be utilized during the R&D process.
Because the simulation model makes it possible to quickly do design iterations,
data-driven methods have proven to be effective for machinery design.
Receiving customer feedback effectively during the early phases of product
development is an important benefit of a data-driven process, as it enables the
involvement of a large group of potential users in the development process. To
better involve potential users though, game-like elements can be added to the
testing platform. Indeed, gamification can boost the commitment of test users
and even encourage the participation of yet a larger number of participants
(Khadim et al. 2018, 2020).
6.3.2 Enhanced operation

Data-driven models can be applied to a company’s different operations to
enhance their operational and performance levels. For a machine operation,
it is essential to have information regarding the machine state to optimize its
performance (Liu et al., 2020). This can be accomplished in practice by using a
large number of sensors. Information from sensors can be combined to get an
understanding of the machine state. However, this requires that a large number
of sensors be used. Alternatively, the machine state can be determined using a
limited number of sensors combined with a data model.
Data-driven technology is evolving quickly and finding its way into specific
industrial applications, such as data-driven models, and its accurate physics-
based representation resolves real-time problems by producing meaningful and
timely data on product behaviors. That being said, this new field of technology
is not fully mature and is currently exploited only for limited uses, so there are
many benefits yet to be discovered and proven.
6.3.3 Maintenance and service

Digitalization has impacted the way that companies do business in different
ways. It has also started new trends. The easy availability and mobility of infor-
mation brings the world to us and also expands the marketplace so that inter-
nationalization and cooperation can expand businesses and succeed in the near
future. The new technologies brought by digitalization, such as the industrial
internet and artificial intelligence and data-driven technologies, are rapidly
changing both products and, in particular, related services. Data-driven tech-
nologies can bring new service-business opportunities and increase revenue.
They also enable new service and solutions business in terms of software, IT,
and expert services. The rapid development of digitalization technologies and
the subsequent changes in the market provide opportunities for new forms of
service business that can be supported, e.g., through research and development
(Cheng et al., 2020).
6.3.4 New business opportunities

Data-driven models essentially offer easy access to the dynamics of a product.
This feature can be used to offer new services and previously unattainable
levels of product features for the customer. The data-driven models based on
simulation approaches enable overcoming the limitations in the scalability, data
processing, experimentation, rate of changes, as well as spatial and temporal
restrictions inherent to operating only on the basis of tangible, physical products
and processes. The concept of combining business and technology is far from
traditional, and therefore it requires making radical changes in current work
processes (Ikävalko et al., 2018).
6.3.5 Supporting sales and purchase

Data-driven modeling can also be used to study different scenarios in a timely
manner. Therefore, it has the potential to support product or process sales to
verify and demonstrate performance in required situations. In case of simulation-
based data systems, it also provides the opportunity to operate the product using
the customer’s configuration prior to manufacturing (Alaei et al., 2018).
Because this way of doing things is notably different, there are major
challenges to adopting data-driven modeling to enable new business possi-
bilities. In current business models, products or processes are stationary. With
simulation-based data modeling, they should be considered more as a part of
the environment, because they can interact closely with their operating envir-
onments. Because the new data models involve training data, they will be
quite reliable and dependable. However, as a result, there is higher demand for
accurate data, so to be able to make correct informed decisions, the validity of
the data needs to be carefully verified.
6.4 Conclusions
Data-driven services are new and are resulting in innovative business models
that can improve the existing business models of many manufacturing com-
panies. They hold great potential for the creation of unique selling points, and
they improve the differentiation of companies in highly competitive markets.
But the technology is still raw and needs to be further developed.
Digitally connected products and services can enable new business oppor-
tunities for data-driven services that can support company growth, markets, or
the commercialization of products when data-driven services are embedded and
integrated into existing processes. Data-driven models can create value and new
business opportunities for companies in different ways. The increase in value
reflects on every part of the supply chain, from the provider to the customer.
While quality requirements are becoming more stringent and technology levels
are getting continually higher, companies are struggling with product processes
that can be helped with data-driven models. The concept of the model is cur-
rently developing rapidly, which is fueling a lot of research and testing.
Notes
1 Surrogate models can be also created with experimental data, but this is less common.
2 Graphical processing unit and tensor processing unit –hardware units of the modern
computers with enormous computational capabilities due to dedicated parallel pro-
cessing architecture. In comparison with CPU (central processing unit) GPUs and
TPUs can process more data per time unit but are restricted in the number and com-
plexity of available operations.
3 Not to be confused with their excellent approximation capabilities. Here prediction refers to
providing output form outside of training domain.
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7
Gamification and the marketing
of agricultural machinery
Suraj Jaiswal, Anssi Tarkiainen,Tuhin Choudhury,
Jussi Sopanen and Aki Mikkola
7.1 Introduction
Traditional approaches to product development and to consumer marketing
can be improved by taking advantage of society’s interest in game-like envir-
onments. Gamification channels the stimulating potential of game mechanics
into a non-game context to motivate user involvement (Hamari & Koivisto,
2015). In complex machinery, operators can play an important role in deter-
mining design needs and maintenance requirements. By introducing a
game-like environment to product development, the simulation models for
complex machinery can be better used to motivate user engagement in the
product development process. In addition, a gamified simulation model can
serve marketing and sales by prompting earlier and more fruitful customer
interaction and promoting better customer feedback regarding products
under development. Its continued application can improve the customer
experience throughout the machine life cycle and lead to novel new business
opportunities.
According to Koivisto and Hamari (2019), gamification refers to “a design
approach of enhancing services and systems with affordances for experiences
similar to those created by games”.These game-like affordances may be related
to, for example, enabling progression tracking, establishing a social setting
that includes networking, cooperation, and competition, and promoting
immersion such as role play, the use of avatars, and in-game rewards. These
affordances motivate users toward targeted behaviors with experiences such as
enjoyment, flow, and accomplishment. For more than a decade, gamification
has been applied both in academics and industry (Dehghanzadeh, Fardanesh,
Hatami, Talaee, & Noroozi, 2019; Deterding, Khaled, Nacke, & Dixon, 2011;
McDonald, Musson, & Smith, 2007). In academics, gamification is used as an
advanced digital tool for teaching (Dehghanzadeh et al., 2019; Kurvinen, Kaila,
Laakso, & Salakoski, 2020; Liu, 2017). In industry, it is currently used mainly
for training (Brough et al., 2007; Li, Grossman, & Fitzmaurice, 2012; Stadnicka
& Deif, 2019).
78 Suraj Jaiswal et al.
Many papers in the literature describe the use of gamification in product
development. For example, one paper proposed a gamified design method-
ology to improve product development by engaging user needs, emotions,
and personality (Signoretti, Martins, Rodrigues, Campos, & Teixeira, 2016).
The role of game mechanics in this user engagement process was also studied
(Leclercq, Poncin, & Hammedi, 2017). Note that game mechanics are the
regulations and procedures of the game that help to define the game-like
environment for the intended users. In a concept design phase, gamification
has helped to evaluate team-confidence and decision-making ability (Petersen
& Ryu, 2015). In some cases, it has been also used to analyze the design
requirements for a mobile working machine (Jaiswal, Islam, Hannola, Sopanen,
& Mikkola, 2018).
In general, an agricultural machine system is complex (Jaiswal, Korkealaakso,
Åman, Sopanen, & Mikkola, 2019). Such complex systems can be modeled
using a detailed physics-based approach such as multibody dynamics (Avello,
Jimenez, Bayo, & Jalon, 1993; Jaiswal, Rahikainen, Khadim, Sopanen, &
Mikkola, 2020). This helps to provide a realistic dynamic simulation of the
machine. In other words, it provides a digital platform that can be coupled
with the gamification concept. This gamified digital platform can be used to
improve the design of such complex systems by using operators’ performance
and feedback on the simulation model. Operator experience is not part of
the traditional design process (Pahl & Beitz, 2013; Schulte, Weber, & Stark,
1993), which strives to define all design requirements at the beginning even
though some may not be determined until later.This gamified approach has the
potential to make the design process more straightforward, because the effect of
different configurations on final product performance can be studied early. By
its nature, such a platform can engage users from the early design phase.
A gamified digital platform can offer additional advantages in terms of
various aspects of marketing such as research, analysis, and product sales and
promotion. From the marketing perspective, gamification is considered a value-
added service in the form of feedback and interaction tools for users (Huotari
& Hamari, 2011). So far, gamification for marketing has been applied mainly
in consumer markets, where the focus is on improving loyalty, establishing
positive word-of-mouth, and promoting engagement in brand communities
(Hwang & Choi, 2020; Xi & Hamari, 2020; Zichermann & Linder, 2010).
Such targeted behavioral outcomes are strongly linked to branding. At first
glance, this might not seem to apply to business-to-business (B2B) markets,
where purchase decisions are typically influenced by attributes that are more
concrete than brand such as price and delivery. However, the importance of
B2B branding has been recognized, and this importance is growing (Leek &
Christodoulides, 2011). For example, Bruhn, Schnebelen, and Schäfer (2014)
found that customer-to-customer interactions in brand communities provide
customers with functional, experiential, and symbolic benefits that also increase
brand loyalty in B2B markets.
Gamification and marketing 79
The objective of this study is to demonstrate a gamification platform for
complex working machinery to streamline the design process and marketing
aspects.To this end, a farm tractor is considered as a case example.The tractor is
modeled using a multibody dynamics approach, i.e., a physics-based modeling
approach. The demonstration includes an affordance that enables progression
tracking. Operators can customize their tractors to improve performance, and
the tractor model offers three engine options. Incorporating game elements
such as goals, curiosity, challenge, fantasy, and control is intended to motivate the
users to engage in the simulation process. Within this setting, user experiences,
game data, a survey, and interviews are assessed. Based on the findings, the
advantages of integrating the gamification platform into B2B brand commu-
nities and enabling social and immersive game-like affordances are discussed.
The remainder of this chapter is arranged as follows. The procedure for
modeling an agricultural machine is described in Section 7.2. Section 7.3
gives an overview of the gamification concept and its implementation. Section
7.4 provides the example of a farm tractor in a deformable-ground environ-
ment. It also includes a discussion of possible business opportunities. Finally, the
conclusions are offered in Section 7.5.
7.2 Modeling an agricultural machine

A realistic dynamic simulation model of an agricultural machine can be
developed using the multibody system dynamics approach. In this approach,
several equations that can be solved in real time are employed to describe the
dynamics of the machine. The dynamic equations may couple different engin-
eering areas such as hydraulics and control systems. The real-time capability
enables the solution of the complex equations in a time less than the simulation
time-step of the model. This can provide users with a sense of continuously
operating the machine without any computational glitches.
The literature offers several formulations to describe the multibody simu-
lation of a working machine (Avello et al., 1993; Bae, Han, & Yoo, 1999; Bayo,
Jalon, & Serna, 1988; Bayo & Serna, 1989; Jalon, Alvarez, Ribera, Rodriguez, &
Funes, 2005). In this study, the simulation employs a semi-recursive formulation
based on a velocity transformation (Avello et al., 1993), which results in a com-
putationally efficient approach suitable for real-time applications. Figure 7.1
proposes a design process that can be used to facilitate a user-parameterized
simulation model.
7.2.1 Design process for parameterization

When parameterizing a multibody model, a base model is made first, and
the parameterized parts are provided as add-ons (Mohammadi, Kurvinen, &
Mikkola, 2019). Model requirements such as geometries and the kinematic and
dynamic properties of the machine are collected to build the base model. The
Start
Model requirements
3D Modeling
Model
No
parameterization
?
Yes
Model parameterization
Parameterized Yes
parts > 5 ?
Use of spreadsheet interface
No
Separate files for parameterized parts
Assembly of parameterized parts
Feasibility analysis
No Model
feasible ?
Yes
Testing real-time simulation model
Model No
requirements
met ?
Yes
End
Figure 7.1 A design algorithm to build a parameterized multibody model.
design specifications are collected for model parameterization. Depending on

the number of parts to be parameterized, a separate file approach or a spread-
sheet interface approach is taken. When the number of parameterized parts is
less than or equal to five, for example, separate XML files are used along with
the base model, which is also an XML file (Mohammadi, 2017). Otherwise, a
spreadsheet interface is used, which is connected to the XML file of the base
model using a script written in any programming language, such as Python
(Jaiswal, 2017). Based on the parameterization requirements, the parts are
assembled to carry out a feasibility analysis. If the feasibility analysis succeeds,
the model is tested, and the design is iterated based on the model requirements.
7.2.2 Environment modeling

The dynamic behavior of a customized real- time multibody model is
dependent on the description of the virtual environment (Jaiswal et al., 2019).
To ensure a realistic dynamic simulation, it is essential to have an accurate
description of the environment as well as the machine. Depending on simu-
lation requirements, modeling certain environmental components makes it
possible to represent the physical environment graphically. These components
can contain complicated geometries and texture mapping. For this study of
agricultural machinery, a deformable terrain environment can be modeled
to facilitate the dynamic simulation in real time. This can be accomplished
by combining mesh-based and particle-based methods, as already shown in
Jaiswal et al. (2019).
7.3 Gamification
Gamification is a process of introducing game-related elements in a non-game
context to produce an enjoyable game-like experience (Werbach, 2014). In
other words, gamification helps to motivate users to participate in various tasks
and activities that can be otherwise non-attractive. The engagement of users is
one of the prime advantages of gamification.With the addition of gamification,
there comes a sense of challenge that results in new insights being realized that
can be applied to non-game-related activities. The gaming aspect encourages
the basic human instinct to accept challenges, overcome hurdles, and ultimately
win (Aparicio,Vela, Sánchez, & Montes, 2012).
For product development, a gamification implementation should provide
positive experiences for the users. In turn, these potential future users of the
simulated machine will come away with a positive impression. In this way,
marketing of the machine product begins even before its initial design is com-
plete. Gamification coupled with digital platforms can be most effective by
providing an interactive and social platform. The prime aspect is to motivate
and engage users to achieve a goal. By allowing users to explore and utilize
the product at the beginning, feedback is generated that can help the product
designers target and achieve a more user-centric product. Furthermore, a user-
specific game design may improve user satisfaction leading to increased prod-
uctivity and end-user creativity (Werbach & Hunter, 2012).
Several approaches to implementing the concept of gamification have been
proposed in the literature. In this study, however, the approach introduced by
Aparicio et al. (2012) has been used. For an effective gamification process,
Aparicio et al. (2012) proposed the following steps:
• Identification of the prime objective of the task or activity that needs to be

gamified.
• Identification of one or more transversal objectives that should capture the
interest of users –based on these objectives, a system is developed using
game mechanics that can help to enhance the motivation and interest of
the users.
• Selection of the appropriate game mechanics to achieve the object-
ives and facilitate user motivation –according to the self-determination
theory by Ryan and Deci (2000), instilling intrinsic motivation in users
is accomplished by satisfying their psychological and social needs such
as autonomy, competence, and relationships. Some examples of game
mechanics for autonomy include avatars, fantasy, a configurable inter-
face, privacy, and notification control. For competence, examples include
optimal challenge, positive feedback, intuitive controls, points, levels, and
leader boards. For relationships, groups, messages, and connections to social
networks are important.
• Analysis of the usefulness of the implemented gamification based on
factors, such as fun, user satisfaction, service quality, and quality indicators –
fun can be analyzed by examining playability metrics. This can be achieved
by testing the users based on specific metrics and based on a questionnaire
on the gamified process. A heuristic evaluation by experts can be used as an
alternative to specific metrics. Effectiveness can be analyzed with a service
quality model that uses predefined quality parameters. Here, a comparison
can be carried out between the values of the quality parameters prior to
gamification and after the implementation of gamification.
7.3.1 Elements of a game

Game elements are introduced in a gamified application. A list of crucial
game elements was identified by Read (2009). Key elements include goals and
obstacles (which can be explicit contexts and enforced rules), challenges (which
can be limited resources or a time constraint), and fantasy (which can be avatars
and a realistic three-dimensional environment). However, Deterding, Dixon,
Khaled, and Nacke (2011) concluded that compiling a universal list of game
elements is not possible. Other possible examples of game elements include
leader boards, ranks, badges, difficulty index, levels, team play, and playfulness.
In this study, the simulation model for a customizable agricultural machine, the
farm tractor, offers a choice of three different engine models. The game elem-
ents introduced in this study are a goal, curiosity, challenge, fantasy, and control.
Figure 7.2 illustrates the gamification algorithm employed.
7.3.2 Methods of data extraction

The quantitative information extraction procedures begin by recording the
game data and analyzing it to support decision-making on a particular phe-
nomenon (Render, 1997). The recorded game data serve as quantitative infor-
mation for the study. Interviewing operators is one of the viable methods for
extracting qualitative information (O’Leary, 2017). Methods used can include
factual interviewing, narrative interviewing, confrontational interviewing,
and focused-group interviewing (Kvale, 2008). In this study, semi-structured
Start
Engine No
selection ?
Yes
Goal and rules description
Continue
Yes Fuel is
over ?
No
Yes
Rollover ?
No
No Goal
achieved ?
Yes
End
Figure 7.2 Gamification algorithm employed in this study.
face-to-face interviewing can be used to collect feedback from the users about
the playability of the gamified application.
7.4 Case example of a farm tractor

The farm tractor model shown in Figure 7.3 is used as the case example for this
study. As explained in Section 7.2, the tractor is modeled using a semi-recursive
multibody formulation. The tractor model has nine degrees of freedom
(DOFs). Six DOFs are for the translation and rotation of the tractor in three-
dimensions, one DOF is for the steering mechanism, and two DOFs are for
the lifting and tilting of the front-loader. The front-loader is controlled by four
double-acting hydraulic cylinders, two each for the lift and tilt mechanisms.The
tractor model includes user parameterization. Operators can select one of three
different engine options. To facilitate the dynamic simulation of the tractor
model, a deformable sand field environment is described.This environment was
introduced by Jaiswal et al. (2019).
7.4.1 Gamification of the farm tractor model

The tractor model in Figure 7.3 is gamified by incorporating a goal, curi-
osity, challenge, fantasy, and control, as explained in Section 7.3.1. The rules,
settings, and boundary conditions of this gamified application depend on the
Fence
Cabin Front-loader
Sand particles
Bucket
Frame
Contact patch during the forward manuever Deformable sand field
Figure 7.3 Real-time tractor simulation model in a deformable sand field environment.
Brake sign Gear indicator
Fuel gauge
Roll
inclinometer
Bucket tilt
indicator
Bucket weight Bucket height

Tachometer indicator Speedometer indicator
Figure 7.4 The gamified graphical user interface of the tractor model showing the
restricted field of view for the driver.
game mechanics used by the tractor model. In tractor operations, because of a

restricted field of view, the operator has limited information about the position,
angle, and weight of the bucket. Therefore, the goal of the gamified tractor
model is to load and transfer approximately 500 kg of sand particles from a
pile of sand onto the ground near the fence. The user interface developed to
achieve a gamified experience for the tractor simulation model is shown in
Figure 7.4.
Curiosity is introduced to the gamified tractor model by restricting the field
of view of the driver, as is the case in an actual tractor. Challenge is introduced
by limiting fuel and rolling angle. Both can be monitored via the fuel gauge and
roll inclinometer. Fantasy is introduced by running the simulation in a real-time
simulator with a motion platform.The simulator gives realistic feedback during
maneuvers and operations. Control is introduced using the bucket height, tilt,
and weight indicators to provide users with the accurate position, angle, and
weight of the bucket. To provide better tractor control, the simulator screen
includes a tachometer, a speedometer, and gear and brake indicators.
As users drive the gamified tractor, their data can be recorded. Based on the time
required to achieve the stated goal, and other factors such as engine selection, fuel
consumption, and rollover occurrence, a leaderboard can be compiled to monitor
relative performance. The leaderboard can track, for example, the performance of
30 or more users comprising both experienced and inexperienced. In addition
to the leaderboard, impressions about performance and other aspects of the user
experience can be collected by making a questionnaire available beforehand and
by organizing structured face-to-face interviews with the users afterwards.
7.4.2 Product development opportunity

What is learned from the users and what is recorded from their operation of the
simulator can be used to modify, optimize, or validate the design of the tractor
model. For example, a user-to-user comparative analysis of front-loader arm
movement could be carried out. Based on relative performance as established
by the leaderboard, tractor designers could then adjust front-loader arm length,
for example, to optimize tractor efficiency. Jaiswal et al. (2018) explored the pos-
sibility of identifying key functionality design requirements for mobile working
machinery. In addition to tractor functionality aspects, the user game data can
also be used to identify key engine parameters, such as average fuel consump-
tion. Using these data, machine design and operation-related bottlenecks can
be identified and optimized.
Features that most users deemed unsuitable can be initially identified from
the game data and further confirmed through the interviews. Based on the
findings, the product concept could be revised and these unwanted features
could be eliminated. Furthermore, the gamified simulator experience can help
to identify the driver interface features preferred by the users. For example, they
may prefer to see machine data indicators such as the speedometer, inclinom-
eter, or fuel gauge as a heads-up display (HUD). Understanding this preference
early on could be invaluable for companies who are willing to integrate HUD-
based technology into their vehicles.
7.4.3 Marketing opportunity

This study result in a gamified digital machine platform that most companies
can integrate into the design and validation of agricultural machine products
under development. Building a brand community and content marketing is
not new to the heavy machinery industries. For example, John Deere is a well-
known international farming equipment company. John Deere has worked to
build brand identity and a brand community since the nineteenth century with
its customer magazine “The Furrow” (Pulizzi, 2013). The gamified digital plat-
form also supports marketing by providing an easy and inexpensive demonstra-
tion of a particular agricultural machine.The parameterization capability of the
machine simulation model gives it the capability of reaching a larger audience,
irrespective of the availability of components. Moreover, potential customers
can be given the opportunity to test a machine they are interested in and exer-
cise it in various scenarios such as the deformable sandy environment used in
this study.
In addition, the proposed gamified digital platform of a tractor can be
integrated into traditional digital marketing channels such as an online cus-
tomer magazine or social media platforms. In the demonstrated solution, the
gamified affordances enabled achievement or progression tracking, that is, users
were able to customize their tractors to improve performance. Stimulating user
competitiveness in this way can help to motivate users to make more use of the
gamified platform. Affordances that enable social and immersive experiences
(such as sharing game-play video, encouraging customization of the tractor,
and providing avatars for game play) can be used to motivate brand-relationship
behaviors. Shared user content is a specific form of word-of-mouth, which is
known to positively influence attitudes and behaviors, as shown in the study
by Herold, Sipilä, Tarkiainen, and Sundqvist (2018). Furthermore, the gamified
digital platform allows users to exercise control over and associate themselves
with the machine, which helps them to develop psychological ownership
(Jussila, Tarkiainen, Sarstedt, & Hair, 2015).
7.5 Conclusion
The objective of this study was to demonstrate a gamification platform for com-
plex machinery that can be used to streamline the design process and improve
aspects of marketing and sales. A farm tractor was modeled as a case example
using a physics-based multibody dynamics approach. This provided a realistic
dynamic simulation of the tractor in real time. The parameterization design
process allowed users to select an engine from three different engine options.
The tractor model was gamified by incorporating the game elements: goals,
curiosity, challenge, fantasy, and control. The role of gamification in this dem-
onstration was to motivate users to engage with the simulator.
In the gamified tractor model, the goal was to load and transfer a mod-
erate amount of sand particles from a pile of sand onto the ground near the
fence. The user experience can be collected in the form of performance data
and data collected from a questionnaire and face-to-face interviews. These data
serve to identify needs and optimize tractor design. The gamified tractor offers
interesting marketing opportunities when integrated into digital marketing
channels. The gamified application can have extensive outreach across versa-
tile media platforms. Future studies can focus on studying the varying user
experiences under similar conditions. Furthermore, future studies could inves-
tigate potential misuse of the gamification concept in the context of marketing.
Acknowledgment(s)
The volunteered support of Dr. Emil Kurvinen in the review process of this
study is highly appreciated. This work was supported in part by the Business
Finland [project: Digital Product Processes through Physics Based Real-Time
Simulation –DigiPro], and in part by the Academy of Finland under Grant
#316106.
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8
Added value from virtual sensors
Janne Heikkinen, Emil Kurvinen and Jussi Sopanen
8.1 Introduction
The chapter introduces the concept of virtual sensors in the context of simula-
tion and explains how they can add value for original equipment manufacturers
(OEMs), end-users, and other stakeholders in the value chain. The concept
of virtual sensors is known to some extent by engineers working in research
and development (R&D), and virtual sensors are applied in the R&D phases
of new equipment development. However, their potential to provide valuable
insights for other facets of business operations such as the maintenance and
repair businesses and other after-sales services is currently undervalued and
unexploited.
This book introduces different aspects of digital tool use for different phases
in the value chain for machinery manufacturing and sales. Virtual sensors are
one of the tools in the digital toolset. Whereas the book introduces different
opportunities for simulation methods on a general level, this chapter gives an
overview of a specific method for using a physics-based digital system model
seasoned with actual measured data.
The objective of this chapter is to introduce the concept of the virtual
sensor. The concept is simple, but its implementation for machinery requires
understanding the limitations introduced by the methods used to build the
models that are deployed by virtual sensors. In addition, to better understand
the accuracies and the practical limitations of the introduced methodology, it
is important to understand what kind of data can be captured from existing
systems and used as input for the simulation models.
The importance of the chapter topic arises from the fact that not every
behavior of a complex physical system can be economically measured or
measured at all, because geometry limitations or environmental conditions
can hinder or prevent access. Instead of taking measurements using physical
sensors, a physics-based digital twin makes it possible to use digital methods to
gain virtual access to the system of interest. Understanding the novel business
opportunities and added value made available by taking a virtual approach
can directly lower end-product costs and give additional insights about the
machine. These additional insights can help, for example, to estimate machine
Added value from virtual sensors 91
risk in detail, and therefore lead to an increase in after-sales services as discussed
in Zheng et al. (2018).
The chapter is structured as follows. First, the concept of virtual sensors is
introduced. The introduction includes the general overview of virtual sensors
explaining the challenges of using the hardware sensors for which the virtual
sensors are providing a cost-effective alternative. The chapter also discusses the
capabilities of the virtual models on a general level, focusing on their capabil-
ities to conduct virtual measurements of the behaviors in physical systems. The
limitations of the technology are introduced and discussed on a detailed level
to clarify both capabilities and limitations. At the end of the chapter, business
opportunities introduced by virtual sensors are discussed in general. Finally,
recommendations are introduced for different stakeholders including business
managers and entrepreneurs, academia, educational institutions, and policy makers.
8.2 Virtual sensors: context and background

Digital twins belong to the group of cyber-physical systems (CPS), where the
integration of a cyber world and the dynamic physical world are represented. In
general, a CPS is divided into two parts: the digital twin, a virtual counterpart
of the physical system, and the actual physical system including its hardware
sensors and connection to the control system. The machine system includes
the control system and hardware sensors whether or not the machine is human
operated or automated (e.g., a programmed process without human interaction).
The digital twin is directed toward engineering aspects, whereas the virtual
models and data are the primary focus (Tao et al., 2019).
Usage of the term “digital twin” increased rapidly after its definition by
NASA in 2010 (Shafto et al., 2010), although the term had been defined earlier
in 2002 (Grieves, 2005). According to NASA, the digital twin is a method of
predicting the structural behavior of an aircraft by simulating and analyzing its
behavior via its digital model. Since then, the term has evolved to include more
aspects and other general approaches including Industry 4.0, machine learning,
wireless communication, and cloud computing (Negri et al., 2017). The defin-
ition of term “digital twin” and its evolution can be found from the review of
Negri et al. (2017). The benefits of these systems originate from ideally having
all parts connected in real time, allowing them to operate based on each other’s
data (Al-Ali et al., 2018).
In 2019, the definition of digital twins expanded, and the concept now
applies to the product it represents throughout its lifecycle, i.e., from design to
manufacturing and operation (Lu et al., 2020). Today, the term “digital twin”
covers so many aspects that comparison of various implementations has become
difficult. This has resulted in the need to evaluate and compare digital twins by
metrics (Autiosalo et al., 2019) and to introduce categorization based on the
sophistication/maturity level of each (Madni et al., 2019).
In this book, the digital twin is presented in the context of its physics basis
and featuring its real-time capabilities. The physics-based digital twin uses the
92 Janne Heikkinen et al.
laws of physics as boundary conditions resulting in virtual models that can
accurately imitate the behaviors of real machinery. Physics-based real-time
simulation models have been used widely for mobile working machinery. For
example, see the excavator model in Alaei et al. (2019), the agricultural tractor
model in Jaiswal et al. (2019), and the forklift model in Khadim et al. (2018).
In addition, the real-time capability of digital twinning makes it possible to
run the simulation model in parallel with the actual machine. That is to say,
the model can replicate machine maneuvers as the machine carries them out.
The virtual sensor is one tool in the digital-twin toolset that can be used to
improve machine operation by giving the operator a better understanding of
the machines’ dynamic behaviors. In the product development process and later
in the product lifecycle, condition monitoring and fault diagnostics provided
by digital twinning are promising features that can be exploited to improve the
performance of machinery (Negri et al., 2017).
Real-time simulation can give the operator an experience similar to that of
actual machine operation. In addition, it makes it possible to study, in real time,
how different parameter settings will affect the machine’s dynamic behaviors.
It also enables timely analysis of the machine’s condition during or after fault
events. Simulation tools offer the possibility of studying systems in real time
using computationally efficient simulation methods. At the cost of accuracy,
some of the deployed methods provide computational efficiency by employing
a simplified methodology. However, the most advanced simulation methods,
such as multibody dynamics simulation, are capable of simulating behaviors in
real time with rather complex models and high accuracy. Additionally, the real-
time simulation models can run in parallel with the actual machine making it
possible to provide real-time information from the virtual sensor readings to be
used for predicting machine condition and assisting in decision-making during
controlled maneuvers.
A simulation model that takes into consideration the accuracy needed and
the complexity of the studied system is required to perform real-time simu-
lation. Computational capacity is increasing continuously and at a fast pace,
and more complex simulation methods can be used for real-time simulation
due to the continuous development of simulation algorithms and methodolo-
gies. Lately, faster-than-real-time simulation has become available. This new
capability offers an interesting opportunity to improve machine behavior
predictability in the near future via simulation, e.g., by using a simulator to
teach operators how to run the machinery so that mechanical stresses are
minimized, which will result in longer machine life and possibly increased
performance.
According to Shenghui et al. (2011), virtual sensors can be defined as soft-
ware algorithms that utilize available measurements from the machinery to
compute an estimate for the physical quantity of interest.Virtual sensors are also
called soft sensors, because they are based on software. Virtual sensors do not
directly sense the hardware as do traditional sensors (Fortuna et al., 2007). With
respect to the information provided, virtual sensors can function the same way
as any traditional hardware-based sensor. To add a virtual sensor, however, it is
not necessary to purchase and install more instrumentation or add weight to the
machine.To realize these cost and weight benefits, a validated simulation model
is required that can estimate the measured quantity with an accuracy sufficient
for decision-making purposes. The virtual sensor can also be used to provide
additional machine data. For example, insights could be made available into the
dynamic behavior of the machine as introduced in by Inamdar et al. (2016).
In addition to the monitoring of machine functions, the virtual sensor con-
cept can also be expanded to include the observation of human behaviors in the
virtual models. This makes it possible to study the human movements needed
to carry out assembly tasks, for example. This capability could be used to assess,
e.g., the ergonomics or timing of tasks in the manufacturing process (Gaisbauer
et al., 2020).
8.3 Virtual sensors as a part of the product offering

The traditional approach to monitoring the condition of machinery has been
to attach physical sensors to the locations that are most fragile or provide the
most valuable information about machine performance or condition. These
measurements are obtained using physical hardware sensors. Hardware sensor
development continues at a rapid pace, and sensor pricing has decreased. Sensors
with modest accuracy are cost-efficient. Even sensors with wireless capability
are both economical and readily available.
However, hardware sensors are prone to failure, wireless sensors are usually
battery operated with limited battery capacity, and wired sensors require direct
connection to the data acquisition system. These deficiencies can be overcome
by using virtual rather than hardware sensing.To exploit their full capability and
to get accurate measurements, however, the implementation and continuous
use of virtual sensors requires another type of engineering expertise above
and beyond that needed to implement a hardware-based sensor solution. The
following sections introduce the technical background basics needed to enable
effective use of virtual sensors and some specific features that are associated with
the used methods.
8.3.1 Technical methods enabling virtual sensing

To use any sort of virtual sensing, one must understand the available and applic-
able technical methods and tools.There are a handful of methods that have been
developed over the years. Some of the simplest methods rely on linear analytic
equations, which make them attractive for analyzing simple cases where a linear
relationship exists between the measurements and the observed parameter. On
the other hand, advances in computational power and the development of more
advanced numerical methods make it possible to conduct more detailed studies.
The selection of methodology is always a trade-off between computational effi-
ciency and accuracy.
Another significant feature that must be considered when planning to use
the virtual sensing approach is if the virtual measurements can be done online
or offline. Online calculation means the measurements must be performed in
real time, whereas offline measurements means that the measurements are done
independently of machine operation, which introduces an opportunity to use
more accurate simulation methods since computation time is not a limiting
factor. Typically, the most accurate model comprises a combination of different
modeling techniques, i.e., analytical equations, numerical solutions, and pre-
calculated parameters. The model used as a virtual counterpart of the physical
system can also be included in the product data management system as a part
of the product data.
8.3.1.1 Analytical methods

Usually, the analytical methods rely on equations that were developed decades
or even centuries ago. Analytical equations are appropriate for simple cases
where the interaction between different parts of the system are simple and
where only a few parts are included.The relationships between these bodies can
be simply described, e.g., using linear relationships. Analytical methods are very
efficient from a computational perspective. However, for more complex systems
or when the interaction between different bodies cannot be simply described,
the accuracy of analytical methods is not sufficient.
Analytical equations could be used as virtual sensors, for example, to estimate
the weight of different objects using the linear relations between force (weight),
displacement, and spring stiffness. As a practical case example, the weight of
cargo loaded into a truck could be estimated knowing the spring stiffness of the
truck suspension and the measurable push of the truck body after loading. Body
displacement can be measured accurately using a very simple and cost-efficient
linear potentiometer –familiar from the elementary school physics –and the
analytical equation would be used to define the weight of the cargo without
introducing complex and expensive piezo-electronic force sensors that would
enable direct weight measurement.The accuracy of the weight estimated would
not be as high as that provided by force sensors for this specific purpose, but the
accuracy would be sufficient for most daily operations.
Although this may be an oversimplified example of a virtual sensor, it
introduces the basic principle that the physical relationship between different
measurements can be used to convert easily available information into a more
valuable format.
8.3.1.2 Numerical methods

Numerical methods are usually used for more complex systems due to the
limited capabilities of analytical methodologies.The development of numerical
methods has been significantly accelerated due to achievements in developing
microchips and other electronics enabling very powerful numerical computa-
tion. One of the numerical methods used most in mechanical engineering that
can be applied to execute virtual sensing is the finite element method (FEM).
FEM is typically used to analyze mechanical structures and their behaviors
by determining loads that occur during operation. The objective is to ensure
that the structure can withstand the forces, pressures, and other loads without
damage.
Systems are modeled in FEM using a number of finite elements that
represents the system as a whole so it can be analyzed via numerical com-
putation. Typically, a significant number of elements are needed to accurately
describe a complex system, and the square of the number of elements is pro-
portional to the computational effort that is required to solve these numerical
problems. In the scope of the book, there is no need to get into more details of
the FEM and all the features of it, but on a general level, it provides a good basis
for performing virtual sensing of object behaviors that cannot be straightfor-
wardly measured if at all. The method gives access to the interior of structural
elements not reachable using any hardware sensor.
One might question if FEM can be considered a virtual sensor due to its
solid footprint as a numerical tool in machine analysis, however, in the context
of virtual sensing, FEM makes it possible to build a virtual replica of a physical
system and provide a virtual environment completed by measured input data
enabling the analysis of computationally inaccessible but interesting system per-
formance parameters.
Another method that has undergone significant development recently is
simulation using multibody system dynamics. In multibody systems simula-
tion, a mechanical system can be described as multiple rigid non-deformable
bodies connected to each other by joints and forces. From the computation
perspective, the system analysis solution is iterative. The state of the system –
its positions, velocities, and accelerations –is solved numerically using matrix
operations, which makes the method computationally expensive. However,
continual increases in computational power and advanced algorithm develop-
ment have brought about significant improvements in computational capability
and efficiency, which in turn have now made it possible to solve multibody
systems in real time or even faster than real time.
Another advanced technique in multibody systems simulation enables the
modeling of flexible bodies by including the description of body deformations.
This technique makes simulation via multibody system dynamics more accurate
and adds the ability to estimate mechanical component durability.
The opportunity to calculate multibody systems faster than real time makes
it possible to predict the behaviors of upcoming machine movements based on
history data and the control signal from the controller to perform maneuvers or
operations related to the expected working cycles. With faster-than-real-time
solutions, the virtual model can predict, in advance, the optimal path to move
a container from one place to another. The optimal path can be determined in
terms of duration, fuel efficiency, mechanical durability, or other factors. These
factors can be defined by the operator, machine manufacturer, or another rele-
vant stakeholder responsible for the performance of the machine, lifecycle costs,
safety, or any other important feature of the machine operation.
8.3.2 Opportunities/benefits and challenges of virtual measurements

Virtual measurements can also be categorized based on computational pace.
The categorization can be as straightforward as dividing the measurement into
offline and online measurements. The definite factor controlling into which
category a method falls is whether or not the measurement can be made in real
time. Online measurement is available if computation time for a one-second
simulation is less than one second. If not, the virtual measurement falls into
the offline category. The following subsections introduce the opportunities and
challenges of both categories.
8.3.2.1 Offline virtual measurement –slower than real time

Offline measurements can be slower than real time. In other words, minutes
or even hours of computational effort can be applied to solve a one-second
virtual measurement. The system model can be accurate enough to include
non-linearities for interactions between different parts of the system, or it can
include different aspects of the system environment. On the one hand, more
intensive computational methodology can result in greater virtual measurement
accuracy. On the other hand, it results in lower computational efficiency.
Offline virtual measurement can be used to study a wide range of different
features of the details of a single component or of a complete machine assembly.
Virtually, any existing simulation method can be used to perform offline vir-
tual measurements, even methods capable of faster-than-real-time solution,
i.e., online measurement. Offline simulation enables the construction, for
example, of lookup tables, where the parameters in the simulation model are
pre-calculated and their effect on virtual sensor values are known in advance.
During actual machine operation, the lookup tables could be used to guide
movements instead of having to perform full simulations in parallel to deter-
mine the needed information.
The main challenge of offline measurements is the reliability of the virtual
model. Accuracy is good, and it reflects the design selection of the user instead
of introducing limitations from the computational perspective. Because of its
offline nature, specifically measured data is needed beforehand to validate the
model and the virtual sensor measurements. This must be an intentional pro-
cedure, which makes it inflexible and not applicable for systems that experience
heavily fluctuating states over their lifecycle. For systems with states that fluc-
tuate over time, the validation of the virtual model becomes problematic. An
account manager or another responsible person must make sure that the model
is updated and follows the actual conditions of the machine.
8.3.2.2 Online virtual measurement –faster than real time
In contrast, online virtual measurement requires the application of faster-than-
real-time simulation methods. Every simulation time step must be solved in
less time than the time-step simulated, i.e., a one-second time span must be
solved in less than one second. Online measurements are enabled by real-time
or faster-than-real-time simulation methods. Real-time simulation makes it
possible to engage the operator directly as part of the simulation model. To
better engage a human as a part of a simulation, the simulation environment can
be equipped with a regular display, virtual 3D glasses (such as Oculus), or even a
motion platform that not only captures the visual aspects of the simulation, but
also provides haptic feedback.
Real-time simulation can be used to adjust the driving parameters or control
algorithms simultaneously when the machinery is running. It enables simu-
lating multiple future scenarios in parallel using, for example, server clusters or
multiple CPU cores. Based on the simulation results, the best scenario can be
applied to maximize performance, extend service life, or prevent failures. With
real-time simulation, simulators can be developed that give the operator an
experience that feels like operating real machinery in the field.
Making online measurements or simulating real- time operation require
computationally efficient methods. Analytical methods are the most applic-
able, but advanced computational analysis routines can also be used to perform
multibody simulation in real time. However, multibody simulation does not
deal well with unexpected events where the numerical methods are unable
to resolve fast enough to sustain real-time simulation or cannot solve the
problem at all resulting in a software crash. Online measurements can also rely
on lookup-table approaches where the tables have been prepared using offline
simulation methods. For example, the nature of contact between two parts
can be pre-calculated using offline methods, and the forces in the real-time
simulation can be recorded based on the pre-calculated and tabulated data for
different operational scenarios or conditions.
The main challenges presented by online measurements relate to meas-
urement accuracy. Successfully making online measurements requires
simplifications to be made to maintain the necessary computational pace.
These simplifications affect the accuracy of the results. This shortcoming can
be minimized if the virtual model is continuously updated by feedback from
the machine in operation. Moreover, it is important to continuously estimate
the estimated error of the virtual measurement. Often case-specific tailoring
of model parameters is required.
8.3.3 Business opportunities introduced by virtual sensors

Virtual sensors can provide added value in the different phases of a product
lifecycle for different stakeholders in the value chain. Their most obvious
use is as alternatives to physical sensors. Virtual sensors are typically used to
monitor the system conditions and performance, and the monitored readings
are evaluated and following actions taken by qualified engineers. Even though
modern hardware sensors are connected to cloud services and monitoring can
be done remotely, a large percentage of existing sensors must be connected
manually to a data acquisition system.
Furthermore, the bandwidth needed to collect all the data is often limited,
so data are not collected continuously when the equipment is in operation.
Instead, data are gathered according to a planned measurement schedule such
as once per day for ten minutes, for example. Virtual sensors offer the oppor-
tunity to do the heavy numerical calculation and data streaming in an internet
of things environment with virtually no limit to computational power or band-
width. That makes it possible to monitor the machine system continuously,
observing the changes of measurements as operational parameters or conditions
change and collecting the data from hard-to-access locations.
Having better predictability of system performance and durability makes it
possible to schedule maintenance as needed, which extends service intervals
and reduces maintenance costs. It also helps to avoid expensive unpredicted
service breaks due to failing machinery. OEMs can guarantee better predict-
ability as a selling argument to the customer. The predictability can serve as a
competitive advantage, or OEMs can improve their service businesses with the
advanced monitoring capabilities. Service businesses can provide an additional
recurring revenue stream raising the monetary value of a single installed unit
and forging another link in the value chain via the upgraded value proposition.
Alternatively, virtual sensoring can be sold as an after-sales product like software
updates. This is a value-add proposition for the customer, because maintenance
costs associated with detecting physical sensor faults and replacing the faulty
sensors can be significant over the life of a product.
Virtual sensors also offer other valuable features. There are many R&D activ-
ities that occur before the mature product stage of the product lifecycle.With vir-
tual sensors, the R&D team can more comprehensively consider the operational
features of the existing equipment fleet. Data made available by monitoring machine
fleet operations reveal actual changing operational conditions and environmental
aspects ranging from in what industry and geographical area the equipment is
operating to what is the expertise and experience of the operators. The better
understanding of the affecting parameters provided enables better product design
that takes into consideration specific conditions that can be further accounted for
in control algorithms, user manuals, or service instructions, for example. From the
manufacturing perspective the virtual sensor concept has the potential to reduce
the number of physical sensors in the end product, which decreases manufacturing
cost and the number of parts in the product bill of materials.
8.4 Conclusions
The chapter discussed the virtual sensor concept in the context of physics-
based digital twins. The virtual sensor can operate offline or online depending
on case-specific needs. In certain dynamic systems such as mobile machinery,
for example, online sensing is required to get valuable operational insight.
In static systems with only a few affecting parameters, offline virtual sensors
can be used. In a product cost structure, the virtual sensor requires a different
kind of investment compared to current sensor approaches, and professional
personnel are needed for implementation and to ensure that accuracy is and
remains at the desired level. The operating costs of virtual sensors are minimal
and implementing them does not require changes to actual system components.
However, the virtual model must be periodically updated as machine wear
affects operation over the product lifecycle.
Recent developments in the technology, simulation algorithms, and com-
putational capacity have made it possible for simulation models to include
sufficient detail to represent complex machine systems with a high degree of
accuracy and computational efficiency. The fastest analysis methods are based
on analytical equations that describe the system through linear relations. The
more complex numerical analysis methods are more computationally heavy,
but they allow model complexity to be significantly higher without sacrificing
accuracy. The achievable level of accuracy and computational efficiency is usu-
ally a trade-off between these two.
Depending on computational capability and the required effort, virtual meas-
urement can be either offline or online. Offline measurement is slower than real
time, i.e., the computational effort to simulate a certain time span takes more
CPU time than the length of the time span itself. In contrast, online virtual
measurement is faster than real-time meaning that calculation is performed in
a shorter time span than the overall length of the simulation.
The introduction of virtual sensors and their use in different applications
promises to further develop and increase the customization level of different
products for customer- specific needs. Virtual sensors also help machine
manufacturers by providing additional insights into machine operations. Because
the interactions between internal and external behaviors can be monitored,
increases in efficiency can be achieved, for example, by better focusing machine
design on specific requirements and system-level performance.
From a broader perspective, the virtual product makes it possible to operate
the machine simulated at or near its physical limits within its virtual environ-
ment. As a result, less actual machine testing is required, which reduces labor
and cost and the test results documentation needed to further utilize test results.
However, making use of virtual sensors requires a different engineering skill
set. Company management must recognize and accommodate this need to take
full advantage of the virtual sensing concept. Virtual sensors require qualified
engineering work, and the models need to be maintained continually.
Because the concept of digital twins is evolving and digital-twin research
is currently very active, the formulations are still being finalized, and standard-
ization is ongoing. The current lack of standardization is slowing integration
of the technology and consequently, general benefits are not well understood.
Pioneering companies are now becoming actively involved in development of
the standards. For example, the ongoing “Digital Twin manufacturing frame-
work –ISO/CD 23247” is currently being established. For business owners and
entrepreneurs being a part of standardization opens a novel opportunity to be
in the front line of the future virtual sensor business.
Policy makers should also understand the present lack of standardization.
The business potential of digital twinning is clear, but practical business imple-
mentation of virtual sensors remains case specific. Standardization should also
consider virtual sensor quality issues in the same way as product quality issues.
In addition, liabilities that could arise from the misuse or misinterpretation of
virtual sensor data should be considered so that responsibilities become and
stay clear, and so that liability issues do not prevent widespread implementa-
tion of virtual sensors. To some extent, academia shares some responsibility to
develop methodologies that provide more valuable digital tools for technology
businesses, but also demonstrate and define practical limitations of the tech-
nology that should be taken into consideration by all the stakeholders.
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9
The technical-business aspects
of two mid-sized manufacturing
companies implementing a joint
simulation model
Manouchehr Mohammadi, Kalle Elfvengren,
Qasim Khadim and Aki Mikkola
9.1 Introduction
Companies are increasingly developing their business-to-business (B2B) activ-
ities to offer more exciting products to end users and customers. However,
because B2B business-model decisions are generally made without input from
end users, these companies often do not achieve their sustainable business object-
ives. Simulation offers an opportunity to increase customer value at different
phases of the product lifecycle (Ripley, 2009; Tao et al., 2019). However, little
research has been done on the technical-business aspects of implementing
simulation in a B2B framework. Nonetheless, real-time simulation methods can
tightly integrate end users and customers with B2B activity. In addition, many
conventional simulation studies ignore the physics of the real world, which
limits the possible technical-business advantages of simulation technologies.
Introducing real-time simulation can eliminate this lack of real-world physics
perspective.
Integrated with a modern simulator system, real-time simulation enables end
users and customers to directly participate in the development and testing of
products. If two manufacturing companies that are providing complementary
equipment for a particular industry segment work together to develop a B2B
joint simulation model, their end users and customers can be engaged to help
select components or sub-components to design and test forthcoming products
that provide better customer value. Using physics-based real-time simulation
makes it possible for the end users and customers to experience the dynamic
behaviors of the products represented by the joint simulation model. From a
preset range of values, they can set the required component parameters to guide
the design of optimal, accurate, scalable, and efficient products. In this way, real-
time joint simulation efforts can contribute to the B2B activities of both par-
ticipating manufacturing companies.
One identified industry need is to better understand the technical-business
aspects of implementing simulation in mid-sized manufacturing companies.
Implementing a joint simulation model 103
Considering this need, this chapter focuses on a case example where real-
time simulation models from two different Finnish companies are integrated
to increase customer value with respect to B2B activity. Objectives include
increasing the participation of the end users and customers, examining the
feasibility of using parameterized simulation models, and exploring the tech-
nical and business aspects of the joint simulation effort. The case example
involves the real-time simulation models of forestry tractor and harvester crane
systems.
The chapter is structured as follows. The following section reviews previous
research on the topic. The third section (Section 9.3) defines an architecture
for building the joint simulation model. In addition, it determines how the
combined model can be constructed based on user needs. The case example,
combining the simulation models of the Valtra N-series tractor and the Kesla
6H-series harvester crane systems, is described and discussed in the fourth
section (Section 9.4). The challenges experienced from both the technical
and business points of view are reviewed. The section also proposes possible
solutions (lesson learned). Conclusions are presented in the final paragraphs.
9.2 Related research

B2B activities would be more successful if end users had more input into product
development. Customer value should be a key aspect of initiatives to establish
customers and end users as stakeholders in B2B activities (Carmona-Lavado
et al., 2020; Lesmono et al., 2020). To achieve and sustain a competitive advan-
tage, customer value in product development must be improved (Anderson
et al., 2006; Zhang et al., 2013). Moreover, there should be more participation
in product development by end users and customers to better define the value
of B2B activities through innovative ideas, skills, education, experience, and
feedback (Aschehoug et al., 2019; Orcik et al., 2013). Parameterizing products
in this way can increase collaboration between users and manufacturers, profit-
ability, and product quality (Orcik et al., 2013). In practice, the implementation
of simulation technologies makes it possible to introduce the needs and choices
of end users and customers in product development activities (Karlberg, 2013;
Tao et al., 2019).
To develop customer- oriented products, Boman et al. also suggested
including users in product development via simulation (Boman et al., 1998).
Simulation use has been proven to be an efficient way to optimize the product
development process, and it is widely used in industry (Mahesh, 2013; Oden,
2006). However, end users and customers can only experience the working
cycles of already prepared simulation models. They cannot directly design and
test new products (Tao et al., 2019). To capture innovative ideas, users should
be able to develop and test a new product simulation model while varying
and selecting component parameters from a catalog according to application
and needs (Goury, 2018; Mohammadi, 2019; Schmit, 2016). However, end
104 Manouchehr Mohammadi et al.
user and customer choices are limited by the traditional use of simulation. This
is because these simulation methods may not replicate the physics of actual
products, or they do not allow a broad selection range of required parameters.
However, a multibody- based real-time simulation model, with its
surrounding environment, gives end users and customers the opportunity
to experience real-world operations. These real-time simulation models are
physics-based models that include solutions to the equations of motion. The
experiences and customer feelings offered by these simulations can be benefi-
cial in the product development phase of B2B activities. Real-time simulation
had been employed in multibody systems in various applications such as avi-
ation (DuVal, 2001) and automotive (Dede, 2014; Tavernini, 2009). The hours
of work needed to develop a model without any guarantee of achieving useful
results is the biggest impediment to extending the use of real-time simulation
(Quesada, 2016).
Efforts have also been made to develop customizable/generic real-time
simulation models that are simple, quickly adapted, and modifiable by end users
and customers (Mohammadi, 2019). For instance, Kaikko developed a simula-
tion model to help find electric drive solutions for industrial vehicles exploring
technical aspects of real-time simulation (Kaikko, 2015). Steele also studied
a generic model, applicable to several systems, by focusing on the simulation
information (Steele, 2002). From a business point of view, reducing build-up/
manufacturing time is desirable.Therefore, a number of researchers have worked
on improving the efficiency of the generic models to decrease manufacturing
times in various areas such as logistics manufacturing (Wy, 2011) and drivetrain
modeling (Zhao, 2013).
The technical-business aspects of a B2B joint simulation using customiz-
able/generic models through real-time simulation have not yet been discussed.
To fill this gap, this study provides a roadmap and details the technical-business
aspects of building the customizable/generic product of a B2B joint venture
through real-time simulation. It could help to establish a balance between the
needs of different partners in a B2B activity to achieve better success.
9.3 Methodology: assembling the joint simulation models
9.3.1 Developing customer-oriented B2B products

Two reasons to use joint real-time simulation in product development are to
minimize the need for physical prototype testing and to better involve users
in the development process. Adding the user input increases the likelihood of
manufacturing products that are customer-oriented (Karlberg, 2013; Xu & Li,
2013). Traditionally, B2B product development has relied on the use of digital
tools, such as design software, by the development team without much input
from users. In fact, there is typically no clear connection between the digital
tools and the target users.
Figure 9.1 The traditional and proposed product development approaches in a B2B

venture: (a) traditional and (b) proposed joint real-time-simulation-based
product development.
Figure 9.1(a) illustrates the lack of user feedback typical for this traditional
process path. The new product development concept explored in this study
introduces a direct connection between the users and product development.
This connection can be accomplished by using the digital tools as the bridge
between product development and the users by including user experience in
the model (see Figure 9.1(b)).
9.3.2 Preparation of B2B parameterized real-time joint simulation model

Users can participate early on in the product development process by helping
to parameterize product simulation models to make them adaptable. As devel-
opment progresses, they can vary and select component parameters, from a
range of allowed values, that best meet their application and needs and then
run simulations to test the resulting product behaviors. The product that results
from this user-based product development approach should provide signifi-
cantly improved customer value.
This parameterization approach can work even better and provide even
more customer value when applied to a B2B joint simulation model that has
been developed by two manufacturing companies supplying complementary
equipment for a particular industry. For an industrial vehicle, there can be
choices related to tire type and size, hydraulic forces, engine output, tractor
parts, forestry machine parts, excavator, forklift, etc. Users can readily select their
intended types and construct the model. Consequently, based on parameteriza-
tion concept, an industrial vehicle can possess different assemblies with different
functionalities. Real-time simulation methods can demonstrate these various
combinations of machines in the real world. End users and customers, in turn,
can decide which combination best fits the requirements of the job.
Figure 9.2 Assembling two models, each with various component/specification options,

to construct a joint simulation model –the check marks in the figure show
which types were selected for this particular simulation.
The Script Real-time

User Interface (Python Script) Simulation
Figure 9.3 Parameterization procedure.
9.3.3 Combining parameterized models and the optimized model

Figure 9.2 demonstrates how a joint simulation model can be constructed by
combining two separate real-time simulation models. Each model can com-
prise a number of different component types or specifications. Varying these
sub-model parameters makes it possible to extract an optimum configuration
that is fully customer-oriented.
Determining optimum components and specifications is important. Many
scholars have been working to define optimum models and methods via simu-
lation (Alfieri et al., 2015). A well-executed simulation model optimization
makes it possible to find the appropriate balance between technical and eco-
nomic issues. Simulation optimization helps a manufacturer produce efficient
products with less effort, which consequently reduces the cost of manufac-
turing (Fleischer & Krauße, 2013; Fu et al., 2005).
A user-friendly interface can be designed to help users select their intended
product configuration. Using a script, the selected configuration can then be
implemented in the real-time simulation software. In fact, the written script acts
as a bridge between the user interface and the real-time software. Figure 9.3
illustrates the concept of parameter implementation in real-time simulation
software.
For better user interaction,visuals or Excel sheets can be used to provide options
to end users and customers to select among the different models, components,
and sub-components.This can be done via an advanced programming interface
Figure 9.4 A user interface constructed in Excel –users can easily select their intended
parameters/specifications.
Figure 9.5 (a) The harvester crane system showing the crane mounted on the truck
trailer, (b) the tractor with its trailer.
Figure 9.4 shows an example of a user interface constructed in Excel. As

mentioned earlier, users can simply select their intended parameter/specifica-
tion and implement it in the simulation model.
9.4 Joint simulation of industrial mobile machines

This chapter introduces the joint simulation model developed by combining the
models for a forestry tractor system and a harvester crane system manufactured
by two different case companies. Three parties collaborated in its develop-
ment: the forest technology company, the tractor manufacturer, and a Finnish
simulation technology company. The tractor system is based on the Valtra N
tractor. The harvester crane system is based on the Kesla 6H. Figure 9.5(a)
shows the harvester crane system. It comprises a truck, the crane, and a trailer.
Figure 9.5(b) shows tractor and tractor trailer system.
The joint simulation involves the modeling of the systems, components,
and hydraulic circuits of the two different product systems. Simulation soft-
ware, developed by the Finnish simulation technology company, was used to
construct the real-time joint simulation model. In the software, the equations
of motion for the simulation models were constructed based on the semi-
recursive method (Slaats, 1991) and were solved using the Runge–Kutta time
integration scheme (Yang, 2015). The hydraulic circuit systems were modeled
using lumped fluid theory (Watton, 1989).
9.4.1 Technical-business challenges of joint simulation/joint

simulation challenges
This section details the technical-business challenges of the joint simulation of
the tractor and crane models. The primary technical challenges were:
• choosing the appropriate parameters from the joint simulation models to

be provided for user selection
• establishing a feasible range of parameters from which the end users and
customers can request changes
• testing joint-model stability and joint simulation models over the range of
parameters
• developing a new optimum simulation model out of the tractor and the
crane models
• carrying out the user selection and testing of the optimum simula-
tion model.
According to Jääskeläinen (2017), varying factors motivate different actors

toward joint product development collaboration. The common motivators
included business success and cost savings. Good motivation, clear goals, and
an understanding of the benefits of collaboration from all parties involved are
necessary for successful joint simulation modeling.
Exercising the simulation models, the participating companies will learn
more about issues that arise and how flexibly their solutions can fit together
(e.g., the tractor and the trailer combination). For example, consider a simu-
lation model with two parameterized specifications and three types for each
of the specifications. There would be six different combinations for this simu-
lation model. Users can assemble models by selecting different parameterized
specifications.The issues found can help to develop better solutions and synergy
between products. Also, these benefits can also lead to advantages for the cus-
tomer (better products), which can lead to more business benefit.
There may be challenges involved in implementing joint modeling and
achieving business benefit. A lack of resources is the first issue usually faced. To
build the models, companies need to bring on the requisite modeling expertise.
Fitting together two different simulation models can be difficult. Bringing on
these resources to get the job accomplished is an investment. Furthermore,
support is needed from decision-makers to get the project budget and resour-
cing approved.
If an R&D manager needs support from a superior, they must present a cost-
benefit analysis that can demonstrate the simulation efforts are going to result
in a benefit to the business. Costs are easy to estimate but the future benefit
from a business point-of-view is much harder to justify. The monetary value
of benefits is often qualitative in nature (Boardman, 2010). Another challenge
is that there are two or more companies involved, so they must both share a
mutual understanding of the possible benefits offered and the effort needed.
Establishing an appropriate time- based strategy or schedule is always a
challenge in any collaboration between multiple parties. In general, each party
focuses mainly on its outcomes. For instance, each manufacturer will strive
to improve its R&D (Nelson, 1986), its patent portfolio (Adams, 2001), and
its process development (Mansfield, 1995). The priority objective for collab-
orating universities is scientific research. Interactions between manufacturing
companies and universities lead to information exchange and the publication
of joint research articles (Boardman, 2009).
Providing industry funds to accomplish an industry-academia project will
increase collaboration, but it will also result in higher industry party expectations
(Bozeman, 2001). Gulbrandsen and Smeby showed that researchers with
industry grants are more effective at accomplishing, which is beneficial for both
parties (Gulbrandsen & Smeby, 2005).
9.4.2 Real-time joint simulation solutions

9.4.2.1 Selection of optimal parameters
In the forestry industry, the truck and the trailer are designed with a spe-
cific number of optimal parameters. These parameters fall into different
categories: hydraulic parameters, pulling forces, physical specifications
(e.g., trailers’ mass, center of mass), etc. Many parameters included in the
truck and trailer simulation models are based on the needs of end users
and customers. Concerned B2B companies further shortlist the chosen
parameters by checking their feasibility in the individual simulation models
and the real world. In the discussed case example, as shown in Table 9.1,
optimal parameters are braking torque of the motor, number of rear tires,
boom length, and cylinder diameter.
9.4.2.2 Optimal range of parameters

As Table 9.1 demonstrates, each parameter has maximum and minimum values/
numbers. For instance, the maximum and minimum values for the boom length
of the forestry vehicle model are 4.35 m and 5 m, respectively. If these parameters
are not optimized appropriately, some of the joint models with parameterized
specifications/optimized components can fail.
For example, consider a joint model with the maximum boom length and
the minimum cylinder diameter. If the cylinder diameter is not adequate to
Table 9.1 Major parameterized components/specifications for the two case models –
each has a certain number of values that users can select
The tractor The forestry vehicle
Braking torque for the motor (Nm) 5,000 Boom length (m) 4.35
15,000 4.55
25,000 5
35,000 Cylinder diameter (mm) 1.105
40,000 1.155
Number of the rear tires 2 1.195
4 1.205
provide the required hydraulic force, the joint model will not operate prop-
erly. In any parameterized simulation model, there are a specific number of
combinations, which have a probability of a failing, that are called “critical
combinations”. The critical combinations include a maximum value for one
component/specification and a minimum value for another directly or indir-
ectly related component/specification. Tractor and crane simulation models are
tested at these maximum and minimum specification values.
9.4.2.3 Joint-model stability

Another challenge is to calculate the type and place of the constraint between
the tractor and the trailer (see Figure 9.6). The joint type and its distance
from the two models should be calculated precisely because it plays a crucial
role in joint-model stability. The joint type should restrict undesirable degrees
of freedom and simultaneously allow all intended movement directions. In
this case, the modeling experts decided to use spherical joints to allow inde-
pendent joint motions in all directions. A spherical joint drives a point from
the trailer on its corresponding point from the tractor without constraining in
its orientations.
In addition, to overcome any instability and dispose the distance calculation
for point A, two frog legs are designed to increase the stability of the main-
booms, the cabin, and the trailer. As Figure 9.7 demonstrates, the forces acting
on the frog legs are supplied by two hydraulic cylinders that sit on the two sides
of the frog legs.
9.4.2.4 Feasibilities of joint simulation combinations

Using the number of parameters from Table 9.1, a number of possible com-
binations of joint simulation models can be modeled. Critical joint simulation
models are tested in this case study for feasibility and functionality. In this way,
end users and customers can select the components/specifications of joint
simulation in the provided range according to the application or needs of
Figure 9.6 The location of the connection spot (Point A) between two models.
Figure 9.7 Frog-leg stabilizers to prevent the main-booms, the cabin, and the trailer
from falling down to the right and to the left.
the B2B product and test the self-specified innovative product using different
combinations. As mentioned earlier, among several parameterized combin-
ations, there can also be infeasible parameterized simulation solutions (crit-
ical combinations). The B2B venture product development team must identify
which solutions are not manufacturable or will not operate properly in the
real world.
9.4.2.5 User selection of parameterized model/user designing and testing of
simulation model
End users and customers can assemble different combinations of parameters in
the joint simulation model and find the best optimal combination as per needs.
Figure 9.8 schematically shows how these models can be joined. For the tractor
model, e.g., a maximum motor braking torque = 15000 Nm, six tires, and four
gears were selected. For the forestry vehicle, the boom length = 5 m, piston
diameter = 125 mm, and cylinder length = 1,155 mm were selected.
These optimal types can be provided to the end users and customers on
the simulator screen. Virtual reality and augmented reality tools can also be
integrated with the simulator driven real-time simulations to tightly engage
users. In the case of an infeasible simulation solution, end users and customers
can report to the product development team. They have an opportunity to
rectify their choices and specify a new feasible joint simulation model. Joint
simulation efforts help to develop a closer communication between the end
users and customers as well as product development team of a B2B venture.
9.4.3 Collaboration benefits and issues on the alliance

In the case study discussed, the joint model can be divided into two major
sub-systems. The puller sub-system, the first, is related to driving the entire
vehicle. The second is the trailer and cranes. In the joint simulation effort,
the tractor system is the first sub-system and the harvester crane system is the
second sub-system. Modeling for each sub-system is the responsibility of the
corresponding experts. These subsystems can be interconnected to construct a
joint simulation-model (see Figure 9.9).
Each sub-system can be designed and developed separately. All sub-systems
will be assembled and prepared in the simulation model. Close interaction
is needed between parties to define critical combinations. Depending on
the objectives, the collaboration between parties may take on many forms
including, for example, research contracts and monthly meetings. However,
meetings between industrial and educational parties usually will occur infor-
mally, and their outcomes cannot be easily measurable (Hagedoorn et al., 2000).
Moreover, goals for each involved party can often differ. Some parties usually
have more research-oriented scientific goals, while others have very clear-cut
business-related objectives. This can lead to a situation where companies are
not committed to the collaboration, even though the benefits are considerable
(Kiron, 2017).
Another benefit of these collaboration situations is taking advantage of the
experts and tools of the different parties involved and finding mutual interest
areas. In the case described in this chapter, the university and the company part-
ners had extensive open dialogue. Solving the technical modeling case was in
the common interest of all collaborators, and the modeling was straightforward.
The parties had a signed research agreement detailing how these results could
newgenrtpdf
4.35 m
1,5000 Nm
Max. motor 4.55 m Boom length
braking torque 2,5000 Nm
5m
4
No. of tires 115 mm
6 Piston diameter
A joint 120 mm
Kesla forestry

Valtra tractor
3 simulation model 125 mm vehicle
No. of forward 4
gears 1,105 mm
5
1,155 mm Cylinder length
1,195 mm
Figure 9.8 Schematic of the procedure on how two models can be assembled and joined together.
Figure 9.9 The process of constructing the joint simulation model comprising several
sub-systems –sub-systems are specified using the parameterization technique.
be used, so there were no concerns about the intellectual properties of the pos-
sible new solutions. Having a written agreement on the utilization rights of the
results is important, and this agreement should be made between the collabor-
ating organizations before the collaboration begins.
In the described joint simulation case, the involved companies gained some
understanding regarding each other’s product. The joint simulation model
offered a platform where these two companies could learn and discuss each
other’s products and joint venture issues. The communication bridges built
during this collaboration will enable more thinking and discussion in the future
with the potential of introducing new mutual business collaboration ideas.
When companies start to plan possible cooperation in simulation modeling,
they should be aware of the typical challenges related to the management of
such collaborations. Lack of resources (money, time, and simulation experts) are
a common issue in these kinds of development projects. Additionally, a common
vision of simulation modeling goals between the collaborating parties should be
clear.The simulation teams should also have strong support from their manage-
ment. When both parties have a clear understanding of the challenges, there is
a better opportunity to actively plan for suitable means and resources to avoid
common pitfalls.
To set common goals and avoid gaps in communication, collaborating teams
should have common workshops, monthly meetings, discussion platforms, etc.
This way, the sharing of information between collaborators will be open and
timely. Understanding the motives and goals of each party helps to set the goals
for the joint simulation effort. It is also easier to spot potential problems and
react in a timely manner. Deeper collaborations can also help to identify pos-
sible long-term business opportunities and benefits (related to customer value
and the utilization of the joint models for customer interaction).
9.5 Conclusions
In this paper a joint real-time simulation model of a combined tractor and har-
vester system was developed and the technical-business aspects of joint simula-
tion were discussed.The model is composed of two different simulation models
from two companies: a forestry company and a tractor manufacturer. The joint
simulation model was designed to be flexible using parameterization. Table 9.2
summarizes the challenges faced and makes recommendations.
Collaboration between companies provides opportunities to take advan-
tage of input from skillful experts in different fields. Furthermore, universities
are able to convey updated knowledge and cutting-edge ideas to industries.
However, projects established with teams comprised of people from different
companies present a number of challenges that should be taken into con-
sideration. Cooperation with customers can help designers to minimize the
challenges and eliminate the barriers in different design and manufacturing
phases.
Table 9.2 The challenges found and recommended solution procedures
Target Challenges Possible solutions
Technical - Developing an optimal - Optimal sub-system models were

aspects joint simulation model developed with the collaboration of
out of two (or more) the experts from all parties.
sub models that have - The experts held frequent meetings
been optimized for their to be made aware and to consider
environment. the overall situation to prevent
- Locating the connection problems and rework arising from
point between the the numerous critical combinations.
sub models - The critical combinations were
- Employing a tested and analyzed to ensure
parameterization technique the functionality of all possible
to offer different model combinations.
combinations - Close interaction with customers
- Establishing the was maintained to keep awareness of
functionality of all their needs throughout the work to
joint-simulation model develop customer-oriented models.
combinations
Business - Communicating fully and - Common goals were established in
aspects at the right time with all workshops involving all parties.
parties - Efforts were made to increase the
- Defining how the modeling common understanding of business
leads to customer value benefits.
- Determining - Support from management was
modeling costs solicited and obtained.
- Deciding how to use the
new models in the future
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Part III
Capturing customer value

and user experience
10
Implementing digital twins
to enhance digitally extended
product-service systems
Ilkka Donoghue, Lea Hannola and Antti Sääksvuori
10.1 Introduction
The strategic driver for manufacturing companies of increased growth and
improved margins is causing them to focus on developing new services. The
traditional approach of offering services as a transactional add-on to products
or providing spare parts has been replaced with a systematic approach. The
servitization (Kohtamäki et al., 2018) of products is transitioning to a holistic
Product-Service System (PSS) (Baines et al., 2007). PSS places demands on
Business to Business (B2B) manufacturing companies, but also presents new
business opportunities for them. The challenge they face can be divided into
two areas: (1) engaging with the customer over the customer lifecycle and
(2) moving from an asset-based view to better understanding the customers’
business and value proposition. Also, the business opportunities offered by
this approach include (1) establishing deeper relationships over the customer
lifecycle and (2) facilitating the outsourcing of business processes to a B2B
manufacturing company. The introduction of information management tech-
nology has added another dimension to building extended digital service
offerings that are based on data or knowledge about how the PSS is being used
or should be used to establish a digitally extended PSS.
To move from an inside-out view of transactional product sales to providing
continuous customer lifecycle service, a B2B manufacturing company must
have periodic touchpoints along the lifecycle.These touchpoints can be realized
by collecting lifecycle data for delivered products (assets) and then simulating
the behaviors of these assets in a virtual environment (Grieves, 2019). Product
Lifecycle Management (PLM) offers a way to ensure that the digitally extended
PSS offered and the asset delivered can be managed systematically from the
design phase all the way through the operations phase and to its end of life
(Donoghue et al., 2017). However, it is not clear how this can be accomplished
via PLM. One approach that has been proposed is the implementation of a
digital mirror of the real-world product (Grieves, 2006). The traditional goal of
PLM has been to provide a management system that enables continuous product
management over the product lifecycle with cross-functional responsibilities
122 Ilkka Donoghue et al.
within the organization (Stark, 2006). However, this results in different parts
of the organization taking responsibility for different phases of the lifecycle,
which typically results in a situation where lifecycle phases are managed and
executed separately. For example, Product Development owns real-time simu-
lation information, PLM design data, and processes. Delivery owns marketing,
sales, and supply chain data and processes, and Services owns assets, services, and
service data and processed based of the Internet of Things (IoT).
In this chapter, digital twins are used to facilitate information-based services
using information from the real-time simulation of the digitally extended PSS
and data collected from assets in operation. To enable alignment between the
digital twin and the assets, connectivity should exist between the two. This can
be accomplished if the Industrial IoT transfers data and information to provide
insight into the current status of the PSS so it can be optimized to achieve the
desired performance outcomes.
The study reported here was carried out to better understand the current
situation for the case companies in these different areas and to collect evidence
of existing digital-twin-based services that are information intensive. Learning
how the subject companies use this insight to build better real-time simula-
tion models that can be applied to services was a second area of interest. The
work is based on semi-structured interviews with eight B2B manufacturing
companies to examine information-based services, simulation models, and IoT
strategies.
This chapter in structured and divided into the following sections. The first
is the review of the related published research, followed by a discussion of the
research methodology and approach for data collection, leading into the pres-
entation of results for the research based on the interviews. Finally, general dis-
cussion and conclusions drawn are offered along with suggestions for further
research directions.

Baines et al. (2007) regard a PSS as a special case of servitization where the value
of the product to the customer is increased with the addition of services. This
establishes a concept of focusing on an outcome based on sale-of-use rather
than sales of the product alone. Goedkoop et al. (1999) define the key elements
of a PSS as (1) a tangible physical commodity manufactured to be sold, (2) an
activity done for or on behalf of the customer that has an economic value
based on a commercial contract, and (3) a system that is a collection of elem-
ents and the relationship formed between the product and associated services.
Therefore, the customer pays for the sustainable use of the product, which is
enabled through the integration of services across the lifecycle. This results in a
PSS that is a system of tangible products and intangible services.
Mont (2000) extends the definition to include information or data-based ser-
vices and connectivity through the addition of supporting networks and infra-
structure. Mont (2000) also includes customer satisfaction and environmental
Digitally extended product-service systems 123
impact reduction along the PSS lifecycle. Therefore, the focus of PSS is to
support business models that provide periodic customer touchpoints following
initial tangible product and delivery service sales. This results in a Long Tail
Business Model (Gassmann et al., 2014) where the focus is on B2B manufac-
turing companies that sell small numbers of systems, but have a large portfolio
of products and services that makes a delivered solution (asset) possible and can
offer the services needed to maintain the solution across its lifecycle. This also
provides an opportunity, via continued engagement with the customer, to sell
continuous services over the lifecycle of the PSS and offer sustained value to
the customer.
Sääksvuori (2019) has shown that a PSS can be digitally extended to include
digital services and data. It can be divided into different domains and several
layers. He also suggests that digitalization changes the way product and services
are designed, which results in more value for the manufacturer and customer
(Sääksvuori, 2015). Digitalization impacts the electromechanical composition
of the PSS and how the PSS is manufactured. It enables new ways to optimize
the supply chain and provides a periodic touchpoint over the customer lifecycle
that fosters a continuous customer–provider relationship.
Grieves (2006) introduced the concept of the digital twin. The digital twin
has been part of the PLM vision, and it is also seen as a key element to the
development of new digital business models for business growth (Donoghue
et al., 2019). Grieves (2019) extended his previous concepts with the introduc-
tion of a dual Smart Connected Product System (SCPS) that can exist in the
real world and the digital world at the same time. Grieves (2019) argues that
the physical twin and the digital twin are connected continuously throughout
the lifecycle with operational data being collected from the physical twin and
sent to the digital twin to verify that the SCPS is operating within its per-
formance parameters or identify when service activities should be done to sus-
tain process performance as agreed upon with the customer. Alternatively, the
digital twin can use multibody-physics-based real-time simulation (de Jalon &
Bayo, 1994) to model the anticipated behavior of the physical twin in advance
or to transmit to the digital twin information such as software upgrades, setup
changes, or operational adjustments.
Grieves introduced three digital twin definitions that are related to the
PLM lifecycle concepts introduced by Stark (2006), Donoghue et al. (2017),
and Grieves (2006). These new digital-twin definitions are (1) the Digital
Twin Prototype (DTP), used for the development of the product and all its
variants, (2) the Digital Twin Instance (DTI), a digital copy of the instances
delivered to the customer, and (3) the Digital Twin Aggregate (DTA), a
collection of all the DTI used to aggregate information about the versions
and variants delivered to gain insight about their operational and service
correlations (Grieves, 2019).
The conclusions given by Donoghue et al. (2019) suggest that to successfully
implement more digital-twin-based operations, a B2B manufacturing company
must find a balanced way to collect data from the assets and learn more about
how the digital twin is used to verify new services, and therefore minimize the
risk of collecting so much data that it cannot be aggregated, assessed, and used
by the business to create value.
The connectivity of SCPS (Grieves, 2019) or digitally extended PSS is crit-
ical to building value and developing new digital business models where the
customer and B2B manufacturing company can cooperate through periodic
touchpoints along the lifecycle (Donoghue et al. 2019). The result is a way of
working in which time, location, or personnel do not hinder the cooperation.
Verdugo et al. (2017) proved that PSS lifecycle value increases when the IoT is
used to offer smart and digital services.The identified benefits were operational
efficiency, risk minimization, sustainability, and value.To understand the role the
IoT has in supporting PSS-driven business, Gubbi et al. (2013) defined the IoT
and its role as follows.
the Interconnection of sensing and actuating devices providing the ability to

share information across platforms through a unified framework, developing
a common operating picture for enabling innovative applications.
(Gubbi et al. 2013)
Basirati et al. (2019) believe the IoT encourages the realization of new ideas,
and that it can simplify PSS development and provide new digital-business
models, closed-loop lifecycle management, and services provided via the IoT
for PSS. These opportunities can also be extended to the SCPS (Grieves, 2019)
for B2B manufacturing companies collecting sensor data from their installed
base (asset) for use in analytics resulting in monitoring services, for example, and
providing autonomy of the SCPS or PSS. McEwan and Cassimally (2013) state
that connectivity is based on the IoT and can be thought as being dependent
on the following aspect.
IoT = PSS + integrated sensors, controllers, actuators + internet (+
digital twin).
McEwan et al. (2014) did not focus on what happens on the other side of
the internet once the data were collected. In their model, they did not intro-
duce the digital twin concept. This modified statement is based on Grieves
(2019) concept for the SCPS to include digital twins. Grieves (2019) and
Donoghue et al. (2019) both highlight that the IoT is essential for the con-
nectivity and transmittal of bi-directional data. Grieves (2019) and Donoghue
et al. (2019) agree that the smart product, PSS, or SCPS also incorporate smart
to the concept in both the physical twin and digital twin forming a founda-
tion for an intelligent, connected digital twin. Smart products and smart digital
systems are not new concepts, but connecting them upgrades an isolated smart
system into an SCPS and a digitally extended PSS. The intelligence difference
is similar to a factory robot that is managed by a central manufacturing exe-
cution system and internal local intelligence that can shut down the robot
when it malfunctions versus an Unmanned Aerial Systems (UAS) that has edge
machine learning and is connected to other UAS’s and operational systems that
use Artificial Intelligence (AI) managed by a centralized intelligent digital twin
(Grieves, 2019).

Research data were collected between October 2017 and March 2018. From
the data, eight companies were selected based on how well their situation
aligned with the goals of the research. For these companies, qualitative research
integrating theoretical and empirical case study data (Yin, 2013) was carried
out through semi-structured interviews. Additional data from four other com-
panies that had been collected from 2011 through 2019 were also included.
For these four case companies, design research methodology (Hevner, 2007;
Hevner & Chatterjee, 2010) was applied, and data were also collected using
semi-structured interviews.This approach was selected to better understand the
start state of the case companies and gain insight into which were able to tran-
sition to information-based services, digitally extended PSS, or SCPS through
the adoption of digital twins. The research process included two phases: (1)
mapping the status of existing services and (2) examining changes over time
as each company moved towards information- driven services or digitally
extended products. The eight core case companies are all B2B manufacturing
companies that deliver complex PSS having long operational lifecycles, which
are either delivered configure-to-order or engineering-to-order.
10.4 Results
The results from the interviews were collected and organized into three cat-
egories that define the capability of the companies to create business value from
digitally extended products, information-based services or Smart-Connected-
Product-Systems (SCPS).The method to categorize company status is based on
the Sääksvuori (2019) digitalization process, which is divided into three areas
of interconnected domains that facilitate digitalization. Table 10.1 is divided
into four columns. The first Case Company column lists the anonymous case
companies. The second, Business Process Digitalization, shows the state of core
business-process digitalization, information, and Information System (IS) archi-
tecture. The third column is the Connected Smart Product Systems, where data
collected from the physical and digital twins are used for simulation and per-
formance verification. It is also used to send information back to the phys-
ical twin for performance adjustments and/ or improvements. Finally, the
fourth column lists Digital Services, which are divided into three Tiers. Tier 1
is Remote/Monitoring Services, Tier 2 is PSS optimization based on digital
twins, and Tier 3 shows services offered to customers who are not traditional
clients (information as-a-services).
The goal of Table 10.1 is to quickly visualize the state of business capabil-
ities to better understand how to leverage benefits from digitally extended
products and gain insight into how far away they currently are from the
Table 10.1 Digitalization framework for digitally extended PSS and SCPS
Case Business process digitalization Connected smart Digital services Points

company PSS
Integrated Digital Analytics Data Digital Tier 1 Tier 2 Tier 3 Total

business interfaces for collection Twin
process steering
RO B(3) D(1) D(1) D(1) B(3) D(1) B(3) D(1) 14

SD B(3) C(2) D(1) D(1) B(3) D(1) B(3) D(1) 15
MN D(1) D(1) D(1) D(1) B(3) D(1) B(3) D(1) 12
VA A(4) D(1) D(1) B(3) B(3) C(2) B(3) D(1) 18
QE A(4) B(3) B(3) B(3) C(2) B(3) C(2) D(1) 21
VI A(4) A(4) B(3) B(3) C(2) B(3) D(1) D(1) 21
MT B(3) A(4) B(3) B(3) C(2) B(3) D(1) D(1) 20
VL B(3) A(4) B(3) A(4) C(2) B(3) C(2) D(1) 22
Max A(4) A(4) A(4) A(4) A(4) A(4) A(4) A(4) 32
SCPS (Grieves, 2019). The following criteria are used to map the current
needs of the case companies. The capital letter (A –D) signifies digitaliza-
tion characteristics. The number in the brackets (1 –4) is used to define
the numeric value that each company scores. D(1) indicates that data are
not available to support the existence of this business capability. C(2) means
the capability is partially needed in more than one but less than half of the
business lines. B(3) indicates that the case company needs the capability for
more than half of its business lines. A(4) denotes that more than 80% of its
business lines still need the capability.
Table 10.1 results show that Integrated Business Process in the Business
Process Digitalization column is an important need for all case companies
scoring between B(3) and A(4). The Digital Interfaces result falls into two
groups. The first group includes those with the D(1) score, which means the
questions or the interviews did not address this area. The second group com-
panies need to build a foundation to establish integrated digital touchpoints.
The Analytics for Steering column results are also divided into two groups.The
first four case companies score D(1), and the second four score B(3) indicating
a need to implement Analytics to Steering. Again, the D(1) score for the first
group means the questions or the interviews did not reveal insight to support
the need contain clear questions to uncover this need.
The results from Connected Smart PSS falls into the two sub-areas Data
Collection and the Digital Twin. Once again, the results highlight that data
collected from the various engagements differ, but they are not as polarized
here. For the first four case companies, apart from case company ‘VA’, the Data
Collection need is not evident. Data Collection focuses on using the IoT to
collect data from the assets, and scoring D(1), data from selected companies
RO –MN did not reveal this need. However, the B(3) indicates that data
collection is a need for case company ‘VA’. Nevertheless, the web pages for
these companies claim that they offer these services to customers with data
collected from the assets.
Cases Companies QE to VL scored between B(3) and A(4) also showing that
Data Collection is a need, and they are already developing and offering this cap-
ability to customers. The sub-column Digital Twin result indicates that all the
case companies have needs in this area with results ranging from C(2) to B(3).
This results for this area is subject to how the case companies define a digital
twin.The first four companies recognize the need and are implementing digital
twins in the DTP form by applying real-time simulation and PLM.
The other companies operate with digital twins of various maturity levels
that include PLM and simulation elements.They lack the connectivity between
the digital twin and the physical twin that Greives (2006) defines for SCPS
where information is transmitted to the physical twin or where data collected
from the asset is used systematically in real-time simulations. And based on
maturity level, the definition of the digital twin can vary among companies.
The last column Digital Services is divided into the three sub-headings Tier
1, Tier 2, and Tier 3. Tier 1 is Remote/Monitoring Services. The case com-
panies from ‘VA’ to ‘VL’ show a need for these services C(2) –B(3), but ‘RO’
to ‘MN’ do not show this need. The company web pages of all the reviewed
companies show they all offer these type services and there is ongoing work
to develop these business capabilities as a customer offering. Tier 2 is PSS opti-
mization with the use of digital twins. This is seen as a business opportunity
for companies ‘RO’ through ‘QE’ and ‘VL’. However, this opportunity emerges
through the discussion in the interviews and was not something that the case
companies identified themselves upfront before the free discussions occurred.
For companies ‘VI’ and ‘MT’, the research did not reveal evidence of a need.
Finally, Tier 3 includes services offered to customers that are traditionally out-
side of the traditional customer base. The data from both research areas do not
suggest recognition of this need. Based on the interviews and discussions with
the different case companies, this does not seem to be area were any activity is
ongoing.
The result D(1) indicates that the need cannot be identified from the existing
data, however, it does not mean that the areas are not needed or that ongoing
activities are not present at this time. The results for each case company from
Table 10.1 can be averaged against the maximum points to reveal the relative
situation for each company as shown in Table 10.2. The over-all average for the
companies is 55.86% with the lowest average being 37.50% and the highest,
68.75%.This result could indicate that the questions and the collected data vary
because of the engagement types. Data collection for the first four companies
(‘RO’ to ‘VA’) was based on focused questions around real-time simulation,
whereas, for the other group (‘QE’ to ‘VL’), data collection was based on Design
Research, and the authors were actively involved in and gained better access to
the internal goals for a longer period of time.
Table 10.2 Case company averages based on the adapted framework
Case company Total points Average (%)
RO 14 43.75
SD 15 46.88
MN 12 37.50
VA 18 56.26
QE 21 65.63
VI 21 65.63
MT 20 62.50
VL 22 68.75
Average 32 55.86
10.5 Discussion and conclusions

The main contributions of this chapter are addressing the shift beyond the
multibody- physics-
based real- time simulation to digital twinning. After
establishing the presence of this shift, the chapter attempts to discover the link
between product-service systems and the digital twins. This link exists in the
PLM vision (Stark, 2015) (Grieves, 2006) (Donoghue et al., 2017) and PSS
research (Baines et al., 2007). The objective to find a theoretical base for digit-
ally extended PSS and SCPS exists based on the related research from Grieves
(2019) and Donoghue et al. (2019) and Stark (2006) and the results of this
chapter.
The framework that was applied from Sääksvuori (2019) to test the shift
towards a digitally extended PSS and then towards and Smart- Connected
Product System (SCPS) cannot be proven without doubt based on the research
data. It did not include or support the needs of all elements presented in the
framework. However, there is strong indication that the case companies are
moving towards a digitally extended PSS and/or SCPS. There is also evidence
in Sääksvuori (2019) that one of the companies is clearly moving toward this
strategy where the extended product can be divided into the hardware, soft-
ware, product lifecycle services (PLS), asset efficiency services (AES), Digital
Services, and Data.
The recommendations for business and entrepreneurs are to take a hol-
istic view of how the different areas presented in this chapter are related and
how they must be approached through continuous development roadmaps
implemented consistently to achieve a business model built on SCPS. Businesses
must focus on getting their internal business processes digitalized before they
can move to digitally extended products and SCPS. Academia has a role in
researching this area further and discovering more established and verified
concepts that businesses can apply in digitally extended PSS and SCPS. Clearly,
most companies are developing the different aspects in silos, and a strategy and/
or roadmap is often missing.
Real-time connectivity for data and

information exchange
Connected Real World Connected Virtual

Solution World’s Digital Twin
IoT Platform
Dynamic physics-based real-time simulation of the physical assets, its environment, processes and or
systems used for various purposes over its lifecycle
The digital twin is connected to its real-world companion over the lifecycle and maintained in tandem
with the physical version forming a Smart Connect Product System (SCPS).
Figure 10.1 Intelligent PSS.
Finally, all the related research presented looks at the same phenomena from
differing vantage points. Figure 10.1 proposes a model that companies can use to
understand the logical elements when integrated to form an intelligent Product
Service System (iPSS) that combines the physical and digital twin with an IoT
platform for connectivity and the integration of Machine Learning produce a
digital twin capable of simulating the real world in real time or faster than real
time to maintain solution performance and business sustainability (Figure 10.1).
The conclusions that can be drawn from this chapter are that the digital
twin is an integral part of the future success of a B2B manufacturing company
and that value can be achieved once the physical twin and the digital twin are
connected and data/information can flow in real time or close to real time.
Because this transformation depends on digital information and company data,
success depends on integrating IS systems with the SCPS or iPSS. To achieve
this, companies must develop new capabilities to change the nature of digitally
extended PSS they offer. An obvious step for the digitally extended PSS is to
include AI either for human-to-system interaction or for Machine-to-Machine
(M2M) operations. In these cases, the digital twin can be used to simulate
reality faster than the real time giving insight into what could happen in time
to take corrective actions before risks materialize.
Acknowledgments
This study was part of the DigiPro project and received funding from Business
Finland and the SIM research platform (Sustainable product processes through
SImulation) at LUT University, Finland. The authors would also like to thank
all the involved companies for the collaboration.
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11
The expected benefits of utilizing
simulation in manufacturing
companies
Insights from a Delphi study
Kalle Elfvengren, Manouchehr Mohammadi,
Ville Kalliola and Lea Hannola
11.1 Introduction
In recent decades, simulation has evolved away from being a tool just for experts
and mathematicians and towards being an all-around technique used in a variety
of different areas. The resulting increase in the number of users has contributed
to the improvement of simulation technology. Today, it is the fundamental tool
driving decisions made on design, validation, and testing for both components
and complete products (Boschert & Rosen, 2016). Just some of the fields util-
izing simulation include health care, marketing, supply chain, military, and
manufacturing. Especially within the manufacturing industry, simulation plays
a crucial role in improving the design and performance of entire systems and
products (Negahban & Smith, 2014). Despite being a critical manufacturing
tool, its use has been limited by the complexity of manufacturing systems and
the expertise required to efficiently make use of simulation (Benedettini &
Tjahjono, 2008).
This chapter deals with simulation modeling in the work-machine manufac-
turing industry. The Delphi research method was used to discover the views of
industry professionals regarding the benefits and business effects of simulation
modeling for mechanical product manufacturing in Finnish companies. A key
result of the analysis is an in-depth view of attitudes and expectations towards
simulation models based on the opinions of industry experts. The results also
provide insight into how the Delphi method is used to identify new business
opportunities that simulation models could bring to manufacturing companies.
The Delphi method is commonly used in technological foresight studies, but
to our best knowledge, analyzing the business potential of simulation activities
related to work-machines has remained relatively unstudied.
The following section reviews prior literature on simulation modeling
motives in manufacturing.The third section (Section 11.3) describes the research
methodology. Next, the results of a qualitative Delphi study are revealed. Finally,
the chapter ends with conclusions.
Expected benefits of simulation 133
11.2 Simulation modeling motives in manufacturing

Law (2015) divided the term simulation into two different concepts: dynamic
simulation and static simulation. The difference between these two concepts
is the way they interact with time. Static simulation focuses at a certain
point in time, while dynamic simulation is a process that progresses through
time. For the purposes of this study, dynamic simulation will be the focus.
Robinson (2014) further defined the meaning of dynamic simulation as
“Experimentation with a simplified imitation of an operations system as
it progresses through time, for the purpose of better understanding and/or
improving that system”.
Providing maintenance services is a key part of manufacturing. Once a
product has been made and delivered, maintenance ensures that it keeps oper-
ating at an agreed upon level in terms of reliability and safety (Mourtzis et al.,
2014). Jahangirian et al. (2010) recognize the potential of using simulation as
a tool to support maintenance operations, because simulation can simultan-
eously provide multiple different functions such as maintenance, production,
and inventory control (Negahban & Smith, 2014). This kind of preemptive
maintenance and process control through simulation can be further improved
upon when done in conjunction with a virtual representation of a physical
product –a digital twin. By feeding actual product data to the digital twin,
unforeseen situations can be analyzed, and product operation can become more
predictable (Kher, 2017).
Achieving profit is a high priority for most companies, which makes it cru-
cial to be as efficient as possible in all your business processes. In the manufac-
turing sector, this means improving production and productivity as much as
possible, which is done by utilizing your machines and production systems at
fullest capacity while cutting down the periods of inactivity (Bako & Božek,
2016). Technologies such as simulation are excellent tools to use when you
are aiming to speed up product design and decrease the overall time spent
in development. The exploitation of simulation-related technologies provides
manufacturers the option of testing and validating multiple different product
and process configurations within the manufacturing system, which leads to
increased overall efficiency (Mourtzis et al., 2014).
Gallois (1993) recognized the importance of efficiency within the manufac-
turing industry, but he also noted that the customer plays a major role.Wortmann
et al. (1997) advised companies to embrace rather than avoid customer-driven
manufacturing. They pointed out that cooperating with the customer as well
as tailoring a product after customer needs is important. The central role of
prototyping and improving production system customization capabilities was
also highlighted. Therefore, not only is it important to be efficient and produce
quality products, but it is also important to be flexible and respond to customer
needs. Klingstam and Gullander (1999) viewed computer-based aids, such as
simulation, as a potential response to increasing market demands. This need for
134 Kalle Elfvengren et al.
a dynamic model to balance available resources with customer needs was also
noted by Heilala et al. (2010). They recognized that previous planning methods
did not meet present needs and that a simulation model utilizing real-world
data was required to meet the needs of the market. By utilizing a dynamic simu-
lation model, they noted that a more efficient balance between customer needs
and available resources was achievable.
Fei et al. (2017) agreed with Gallois (1993) that customers should be at the
core of product design and that customer involvement is incredibly valuable. He
points out that to benefit the most from customer involvement, the interaction
should begin as early in the design process as possible. By utilizing simulation
alongside the digital twin, the communication between customers and other
stakeholders can be sped up through the real-time acquisition and transfer of
data. Moreover, issues the customer has had when trying to utilize the pre-
vious generation product can be pinpointed, thus generating more customer
value. The potential for generating customer value through co-development
was also noted by Mikkola et al. (2014). This type of exploitation of the digital
twin is becoming more prevalent within the manufacturing industry, because
it has the potential to open new areas of business through services (Donoghue
et al., 2018).
11.3 Research method and data gathering process

A qualitative Delphi study was carried out to provide the primary data.
The Delphi-method is a well-known research method traditionally used in
forecasting. It is based on expert panel surveys. The surveys promote discus-
sion, because the individuals in the chosen expert group can present their
opinions over the course of several survey rounds. A commonly used definition
is found in the seminal work of Linstone and Turoff (1975): “Delphi may be
characterized as a method for structuring a group communication process so
that the process is effective in allowing a group of individuals, as a whole, to deal
with a complex problem”.
The Delphi method first applied by the Rand Corporation in the 1950s.
The characteristics of the traditional Delphi approach are anonymity, iteration,
feedback, and consensus. In Delphi-research, one of the original main goals was
consistency, but today this is seldom seen as necessary or even desirable (Okoli
& Pawlovski, 2004; Kuusi, 1999). There has also been some criticism towards
the Delphi. For example, Sackman (1975) and Baker et al. (2006) argue that the
“experts” may not be sufficiently knowledgeable and that their opinions might
not reflect reality.The critique has resulted in attempts to reevaluate the validity
and reliability of the method (e.g., Rowe & Wright, 2011).
In this research, the Delphi method was expected to be effective in forming
a common view of professionals related to the benefits and business effects
of simulation modeling of mechanical products in Finnish companies. Delphi
is a well- structured method for collecting in- depth views of experts, and
documenting the research process is straightforward.The Delphi study is critic-
ally dependent on the quality of the knowledge captured. This study benefited
Table 11.1 The Delphi panelists
Company/business Position/expertise
Elevator and escalator industry R&D team leader

Category manager, machines
Tractor manufacturer Team leader, research and simulation
Forestry and material handling technology Head of R&D
manufacturer Product designer, software developer
Material handling machinery R&D director
Developer, drive systems
Digital twin and simulation solutions Managing director
provider Project engineer
Electrical drive technology solutions Managing director
Hydraulic cylinder manufacturer R&D engineer
System engineer
Machinery and equipment for production R&D manager
process in the wood industry Simulation engineer
Equipment and tools, service and technical Engineer manager
solutions for the mining and construction Product Development Manager
industries Dynamic simulation engineer
Forklift solutions Manager, testing & prototypes
Simulation engineer
from a wide range of opinions presenting specialist knowledge of simulation

modeling in Finnish industrial companies that use simulation modeling to
some extent in some of their operations. The 20 experts chosen were product
development engineers, software specialists, business managers, and executives
(see Table 11.1).
The analysis focuses especially on the effects and possibilities of simulation
modeling. It examines discrepancies and views, and at the same time tries to
find the relevant arguments behind the views. The Delphi process (Table 11.2)
took about three months.
The goal of the Delphi study was to establish an expert-opinion-based view
of the effects of simulation modeling on manufacturing in Finland. Based on this
assessment, the goal was to increase understanding of new business opportunities
in this area and of innovations that may affect the current situation. The Delphi
expert panelists included 20 carefully selected participants from the business
sector. Panelist commitment was confirmed before sending the first question-
naire to ensure the experts would participate actively in the entire research pro-
cess. The instructions and summaries of the results of previous Delphi-rounds
were delivered to the members of the expert group via email attachments.
The participants responded to the questionnaires electronically using the
MeetingSphere internet portal. MeetingSphere is an electronic meeting software
that allows participants to enter their opinions and votes on a common internet
page. The response time was set to about three weeks per cycle.
Table 11.2 The developed Delphi process
Stage of the process Content and tasks
Deciding on the goals Planning the research with academic and firm representatives
and scope Deciding on the schedule and implementation
Planning the content 4 rounds and joint meeting
of the Delphi Identifying the key issue areas of the research
rounds Forming the questions
Selection of the List of potential participants
expert panel Willingness of the participants to engage in the research
1st round What are the companies hoping to gain from simulation/
digitalization?
What benefits have emerged or are expected because of the
simulation models?
What kind of resisting forces are there in the organization
against the simulation functions/efforts?
Evaluating the results Summary of the responses
Forming the 2nd round questionnaire
2nd round Possibility to comment on the 1st round summary report
Prioritizing benefits and resisting forces (change drivers)
based on the 1st round results
What kind of business-related effects can be achieved using
simulation in the long term? What benefits are there for
the stakeholders in the long term and how to measure
these business-related impacts?
How to identify customers who want to cooperate and
commit?
Evaluating the results Summary of the responses: ‘force field’ analysis and summary
Forming the 3rd round questionnaire
3rd round Possibility to comment on the 2nd round summary report
Prioritizing business-related effects based on the 2nd round
results by using two criteria (cost-benefit and attainability)
Evaluating the results Summary of the responses
4th round Summary of the 3rd round responses
Possibility to comment on the 3nd round summary report
Evaluating the results Summary report of the whole Delphi process
Presenting the results to the panelists
Discussion of the results and their utilization
Consensus; argumentation of the most controversial issues
11.4 Simulation modeling in manufacturing companies:

insights from the expert panel
The main findings related to the Delphi research are presented in this section.
During the first round, the experts expressed their hopes and goals towards
the simulation models, which they are now dealing with in their companies.
Table 11.3 offers a summary of the expressed comments, which were divided
Table 11.3 The typical goals the companies are hoping to gain from simulation modeling
Area Goal
For product To understand what making a model means in practice and what
development could be done with the models
The better utilization of the opportunities provided by simulation
within the context of product development
Examining and testing new and more versatile ideas which would
be excluded through traditional design process either due to costs
or because they are too time consuming
Faster comparison of multiple solutions through virtual models
Examining what type of simulation model or hardware is required
to achieve a reasonable level of results
To speed up the product development process while improving
quality
For customer- To develop methods for customer-oriented product development
oriented To find ways to support user interface development and to gather
product user feedback from the interface concepts at an early stage
development To improve product development processes so that through real-
and testing time simulation you can test and verify the control system and
gather feedback on the control of the machine from the customer
before building a physical prototype
The premise is that simulation will shorten the required testing time
and improve the communication between different departments
when the simulation models are used by a larger group
Testing the new machine models, configurations and sub-assemblies
before production
Improving the design of the control system
For other The models should be easily configurable for different purposes;
functions sales and marketing will become easier when it is possible to
demonstrate different situations with the models
To increase the utilization of real-time simulation and enable a
larger group of people from different functions to benefit from it
For sales, the goal is to enable the simulation of certain customer
cases to provide a better user experience and to verify the
functionality of the solution
For education, the goal is to make the process of transferring machine
models and user interfaces into the simulator faster and easier
Related to To be able to enhance application design and preemptive
digital twin maintenance
and IoT To apply the embedded real-time models in service business, for
example by using digital twin models in preemptive maintenance
control and malfunction diagnostics
To enable the use of real-time simulations alongside IoT-systems
into four slightly different categories: things affecting product development

alone, things affecting customer- oriented product development and cus-
tomer interaction (e.g., testing), things affecting other company functions (e.g.,
marketing), and aspects related to IoT and digital twins.
In addition, the panelists were asked what benefits have emerged or are
expected as a result of the simulation models, and what kind of resisting forces
are there in the organization against the simulation functions/ efforts. The
answers were summarized and then added to the second-round prioritiza-
tion task.
In the second Delphi round, the panelists made assessments about the pro-
moting and hindering aspects of simulation modeling in their companies.These
forces working for and against the implementation will either favor or hinder
the development of simulation as a work tool and the utilization of simulation
models.The panelists evaluated the significance of these forces on a scale of 1–5
(1 = minor significance, …, 5 = very strong significance). Tables 11.4 and 11.5
show the forces for change seen as significant (the average rating >3).
The tables formulate a force field analysis. Force field analysis is a widely
used managerial tool that can analyze the hurt points of organizational changes
and implementations of new procedures (e.g., Ajimal, 1985). In this case, the
force field analysis can be used to find out the important aspects to concen-
trate on if the purpose is to increase the popularity of the simulation modeling
procedures within the company. For change to take place, the driving forces
must be strengthened, or the resisting forces weakened.
Table 11.4 Benefits emerged or expected because of the simulation models
Forces for change Average
Shorter implementation and testing times because the control system has 4.8
already been tested in the simulator
Can be spared from a physical prototype manufacturing round if the need 4.7
for change is already revealed in the simulation
Benefits for product development by doing virtual testing 4.2
The test situation in the simulator is not too predetermined and it is 4.1
possible to find out things that could not be asked/noticed in advance
Products meet customer needs faster/cheaper 4.1
Accelerate failure in planning/testing and thus learning in product 4.0
development
Testing different product variations more systematically and 4.0
comprehensively, especially from the point of view of usability
A better understanding of the machine’s dynamics, especially in the initial 4.0
dimensioning phase
Enabling hardware and control solutions that would be too expensive/ 3.9
time consuming to develop without a virtual model
Utilizing simulation will shorten the overall time of product development 3.8
from idea to market
Enables operator training without a physical machine → speeds up the 3.4
development of operator skills
Customer’s test driver’s feedback can be considered before the machine is 3.6
built, making it easy to make changes
Able to enhance application dimensioning and proactive maintenance 3.3
Table 11.5 Resisting forces against the simulation functions/efforts in the companies
Forces against change Average
Resource requirements, the most important of which is the encounter 4.1

between financing, skilled persons, the time spent, and the right target of
application
Building models is laborious and models often should be very quickly 3.9
operational and meet the needs of your business
Workload required by simulator development 3.8
Sometimes the lead time required by the simulation work can be a 3.8
problem in a fast-paced product development project
The development and maintenance of models in product development 3.8
projects should not be more cumbersome than the current practices
Finding the characteristics/data of the devices so that the ideal device is 3.6
correct with the right accuracy
Technical challenges slow down the use of simulation 3.6
Multiple parallel simulation and modeling tools in use → finding interfaces 3.5
and a comprehensive platform is challenging
Multiple machine types are simulated so that you cannot easily combine 3.5
subassemblies
“Selling” simulation practices to people in different departments/fields is 3.3
always very challenging
Engaging colleagues/decision-makers in the need for a simulation project 3.3
→ references and examples are required
Because of the amount of work required, the costs are too heavy to allow 3.1
for large-scale utilization in a smaller company
Lack of knowledge; modeling requires knowledge of several different areas 3.1
11.4.1 Benefits of using simulation in the long term for the customer
and other stakeholders
During the second round, the panelists were asked their opinions on the
benefits for the customer and other stakeholders of using simulation methods
in the long term. The group members commented that if simulation mod-
eling can accelerate the development of new features for new products, it also
benefits the customers. Stakeholders and customers have the chance to be a part
of the development phase by providing comments and ideas as they use and
test the simulators. Generally, the group members agreed that, with the help of
simulation modeling, the likelihood increases that products will better match
customer needs and that company stakeholder understanding will improve.This
could occur if the stakeholders are given the opportunity to use the simulators.
They should also be able to freely give feedback about their experiences to the
product development teams.
One participant commented that, in the long term, simulation models are
coming ever closer to the customer’s operating environment and becoming a
process in which everything is part of a virtual model. Most likely this will pro-
vide a completely different chance to increase productivity benefitting both the
customer and the developers. The need for customer-specific configurations
will also probably increase.
In addition, one participant noted that a customer benefit could result from
the decrease in operation interruptions. Maintenance can become need-focused,
thus decreasing costs. Solidly designed and maintained up- to-
date system
solutions could benefit the customer. According to questionnaire responses, the
expert group assumes that customers will gain a better comprehension of the
products and their suitability to satisfy needs if they can take part in simulator
testing of the new products under development.
In the second Delphi-round, the group was also asked about the ways to
measure and evaluate the long-term business-related impacts of simulation activ-
ities. One answer highlighted the fact that if these simulation models are used in
preemptive maintenance, their impact can be easily pointed out. For example,
the truthfulness of automated error notifications, the amount of maintenance
stops needed for a solution, and the amount of customer error notifications
serve as good measuring points. The following measures and evaluations were
noted as having potential.
• Through turnover and volumes –Key parameters such as the number of new
products, service sales, or changes in market share could be compared
between projects that use simulation activities and those that do not.
• Prototyping and product problems –The number of prototypes needed and
unforeseen product problems during prototype testing could showcase the
success rate of simulation during the development phase.
• Product development schedule and cost –How simulation activities affect the
time it takes to run a product development process and the amount of
testing required could be examined.
• Customer satisfaction –Customer satisfaction could be monitored via cus-
tomer feedback and polls, by measuring the number of new customers, and
by recording the loss of existing customers.
• Preventive maintenance –Quantifying the volume of unforeseen malfunctions,
the truthfulness of automated error notifications, the amount of mainten-
ance stops needed, and the amount of customer error notifications received
would help to define how simulation activities affect preventive mainten-
ance operations.
In addition, the participants were asked how to identify and get commitment
from customers who want to cooperate in simulation activities.The participants
stated the following viewpoints.
• Customers should be prepared to share necessary information and should

also be willing to commit their resources to generating, upkeeping, and
developing the models.
• By remaining in contact with the customers, the manufacturer should be
able to figure out who is most likely to impact the project. The customer
is not always the end-user, for example, in the case of dealer networks, big
dealers have a desire to influence.
• You get the customer to commit through results and open cooperation.
Commitment comes from successful cooperation.
• Often a consulting company hired by the customer demands a model of
the overall solution.
• A customer commits once they can see the impact possibilities and are able
to participate in the development.
• This could depend on the customer, but simulators should be able to con-
vince the customer of its benefits. Simulators should include indicators
about things like productivity that can measure the added value.
11.4.2 The business-activity related effects of simulation

In the second round, the panelists presented their opinions on the long-term
effects of simulation work on company business. These opinions were taken
to the third round of the Delphi questionnaire where the panelists evaluated
these business effects according to two criteria: costs efficiency and achievability.
First, the panelists were asked to estimate the effects of simulation on business
activities and their cost and efficiency related impacts. Resources, such as time
and money, must be invested to realize business-related benefits. The panelists
used a grading scale of 0 –6. (0 = very small, …3 = decent, …6 = very big).
Then, the panelists were asked to evaluate how realistic it is to expect that these
impacts could be achieved.The grading scale was 0 –6. (0 = difficult to achieve,
…6 = easy to achieve). Table 11.6 presents the suggestions for the business-
related achievements for the company resulting from the implementation of
Table 11.6 Suggestions for business-related achievements of using simulation in the

long term
Business-related achievement Costs-efficiency Achievability
Mean SD Mean SD
Efficient use of simulators in software testing and 4.8 0.26 4.4 0.25
development
Agreed upon/Understood specs at an early stage 4.6 0.16 4.3 0.14
Stronger support of product design and new 4.6 0.16 4.3 0.18
product development through simulation
Involving customers, customer support and other 4.4 0.18 3.7 0.22
stakeholder groups in the design project through
concept simulation → gaining information about
customer needs through their involvement in the
design process
(continued)
Table 11.6 Cont.
Business-related achievement Costs-efficiency Achievability
Mean SD Mean SD
Speeding up product development and testing by 4.4 0.18 4.6 0.14

utilizing simulation
Advanced simulation platform provides product 4.4 0.22 4.1 0.17
development a more in-depth understanding of
the product and its uses
Customer can be involved in the product 4.4 0.22 3.8 0.27
development and testing at an earlier stage →
more versatile information transfer and the
overall improvement of understanding
Unrestricted testing and validation of new ideas for 4.3 0.16 4.4 0.14
further development
Presenting product properties is easier 4.3 0.18 4.1 0.23
The increase in sales and production volume 4.3 0.19 3.6 0.16
through improved products
Better risk management in product design 4.2 0.20 3.2 0.17
Simulation connects different functions within the 4.0 0.18 3.2 0.19
company in a better way
Supporting sales and marketing activities through 3.9 0.24 4.3 0.22
simulation
You can simulate how the product functions in 3.3 0.19 3.1 0.17
customer’s processes through simulation →
ability to add in new services
Managing real-world systems through simulators 3.3 0.29 2.2 0.25
(digital twin)
Simulation can find new potential business 3.1 0.27 3.0 0.21
opportunities while managing the solutions of
current endeavors
Product customization in project deliveries can be 2.7 0.28 2.3 0.30
controlled more efficiently
An advanced simulation platform can improve the 2.6 0.18 1.9 0.09
methods of preemptive maintenance: monitoring
the condition of systems, ability to focus
maintenance in a better way and find the root of
the potential problem
Forming new customer relationships while 2.2 0.19 2.3 0.24
managing the old ones through the utilization
of the simulation platform. The ability to sell
services that provide more value
simulation in the long term. The “Mean” is the calculated average of the given
grades, and SD is the standard deviation.
11.5 Conclusions
The overall benefits of simulation seem to be centered around product devel-
opment. The basis of simulation goals related to product development is to
gain a more in-depth understanding of the model and its uses to apply it in
the best possible way when the opportunity arises. Moreover, simulation tech-
nologies were seen as a way to directly improve product quality or as a way to
enhance the functionality of one area such as the control system while reducing
product development time. The heavy reliance on physical prototyping within
the manufacturing sector was noted, and the industry experts emphasized that
more research was needed into what type of simulation model or hardware
would provide the same degree of product validation.
The expert panelists also expressed interest in customer integration, which
was seen as something that could directly bring extra value to product devel-
opment. They understood the importance of the customer experience to their
business, and therefore they felt that developing user interfaces based on feed-
back gained from their product end-users was important. Developing new ways
to further integrate customers into the product development processes was
considered a potential future goal.
The experts indicated that user satisfaction can be increased by involving
potential customers in the earlier phases of product development. It is better to
involve users up front in the design phase and not just later in model testing.
With earlier user involvement, designers can construct their models with more
and more attention paid to customer wants and needs, and customers can gain
more appreciation as to what is and is not practical or possible. For example, if
potential users request a vehicle functionality that is not achievable. Real-time
simulation carried out during the design phase will demonstrate to the cus-
tomer that this function is not practical or possible and prevent the pursuit of an
unachievable design requirement saving both time and money. Involving users
early will produce an outcome that is more functional, more precise, and more
customer oriented.
The main driving forces behind the adoption of simulation technology in
manufacturing were all centered around its potential to improve all aspects of
product development.The resisting forces are mostly resource-based. Successful
implementation demands a heavy investment of both time and resources. The
technical complexity of simulation as well as an overall lack of knowledge by
management was also considered to be an impediment.
Real-time simulation models make it possible to elevate all specifications
and packages (e.g., a hydraulic or steering package) to maximum function-
ality. With digital twinning, models can be designed and analyzed to determine
the part interconnection efficiencies of a new product design resulting in sig-
nificant decreases in time spent on production and for maintenance. Real-
time simulation models can reveal the weaknesses and strengths of a proposed
product vehicle before the design has been finalized and a prototype built.
Furthermore, simulation models offer the opportunity to inexpensively and
safely train future users.
The most cost-effective and achievable benefits of simulation also centered
around product development. The experts felt that the resulting overall
improvements to the development process would lead to faster development,
higher product quality, and better risk management. Using simulation methods
to cultivate new customer relationships or to enable product customization was
less interesting to the experts and seen as hard to achieve. Despite the lack of
interest in customization, the customer aspect of simulation still showed promise
to the experts. They felt that simulation could be used by marketing and sales
to enhance customer presentations.The potential to incorporate customers into
product development was also something the experts felt was achievable and
cost-effective.
In this chapter, we brought together expert estimates of the potential impacts
and added value brought by the implementation of simulation systems in manu-
facturing. The chapter also examined the suitability of the Delphi method used
to the gather the data needed to carry out the research. A four-phase Delphi
process was designed that comprised anonymous written survey rounds. The
research process was laborious and took about three months. The planning, the
time it took for panelists to reply to the questionnaires, and the time needed for
the analysis of the responses took a lot of time.The characteristics of the Delphi
method; such as participant expertise level, response anonymity, feedback, and
its iterative nature; guaranteed that the research process proceeded well. The
expert panel clearly brought the manufacturing industry and digitalization/
modeling expertise needed to complete the research.
The combined opinions of individual experts formed a surprisingly smooth
description of the expected goals and benefits of simulation modeling as well
as the barriers and long-term business-related benefits. The easily achieved
consensus may have been a result of the relatively homogeneous background
of the participants. A limitation of this research is that the panel did not include
people from different backgrounds and experience, e.g., professionals with
experience in a variety of organizations, a diverse work history, variation in
age and education, etc. Had the panel of experts been more heterogeneous,
it is more likely the results would have been more confrontational, insightful,
and creative.
In conclusion, the Delphi study helped to increase the understanding of the
theme. The result was easily exploitable material, such as a force-field analysis.
Delphi results are always impacted by the strong group of experts involved in
the contribution of the research process as well as careful planning and execu-
tion. The research provided a theoretical contribution by showing once again
the suitability and strength of the Delphi as research method.
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12
Integrating the user experience
throughout the product lifecycle
with real-time simulation-based
digital twins
Qasim Khadim, Lea Hannola, Ilkka Donoghue,
Aki Mikkola, Esa-Pekka Kaikko and
Tero Hukkataival
12.1 Introduction
Sustainable business models stress the need to increase customer value
throughout the product lifecycle from product design and development to
production, service, and disposal. In traditional product development using
conventional technologies, users have access to physical prototypes, but they
cannot experience the product during its design and development stages.
Accordingly, conventional product development does not involve users in
decision making throughout the entire product lifecycle. This can result in
expensive and unsuitable products that do not fully meet user needs (Tao
et al., 2019) (Armendia et al., 2019). Utilization of digital technologies such as
a physics-based real-time simulation of the physical product potentially allows
users to be involved throughout the product lifecycle from product design to
product disposal.
Previous literature on digital twins has focused primarily on the modeling
and data management aspects. Work that has considered the modeling per-
spective of digital twins has generally focused on the product and processes
without considering the physics and connections to the physical counterpart
(Tao et al., 2019) (Armendia et al., 2019). Data management studies, in turn,
have mainly used digital-twin information to describe product processes and
information flows. While providing valuable information, important elements
of user experience are absent in such studies.
A multibody- based digital twin involves the dynamic solution of the
equations of motion for the physical product. It can provide, as a single source,
information about its physical counterpart. This information can be shared
with end users and customers to co-create and increase the customer value of
product-service systems during the various stages of the product lifecycle. In
addition, virtual reality (VR) or augmented reality (AR) tools can be integrated
with a multibody-based digital twin to enhance the user experience (UX) in
148 Qasim Khadim et al.
an immersive environment. Thus, users and potential users can experience, vir-
tually, the working cycles of the real-world counterpart via VR/AR technolo-
gies, and help to develop more efficient management of product development
processes. The engagement of end users and customers in product develop-
ment and enhancement processes can generate innovative ideas and provide
valuable insights enabling changes and improvements in future products and
related services (Tseng et al., 2010). Moreover, taking into account the user
experience and customer needs throughout the entire product lifecycle by the
UX and data generation with multibody-based digital twins may enable radical
innovations in competitive markets (Orcik et al., 2013).
An industrial need is the necessity to explore the potential of digital tech-
nologies (e.g., VR) for testing the UX of end users and customers and for
co-creating customer value in a product and/or service. This chapter focuses
on the user experience with VR technologies in a real-time simulation based
on multibody system dynamics. Therefore, the objective is to explore the role
of users in multibody-based digital-twin utilization throughout the product
lifecycle, including design, production, service, and the end-of-life stages.To this
end, a real-time simulation of an industrial 3W, 2.0-ton, EVOLT 48 counterbal-
ance forklift truck using VR tools is described, and a methodology is proposed
that enables the integration of the UX throughout the different stages of the
product lifecycle.
The rest of this chapter is structured as follows. The next section describes
the multibody-based digital twin and highlights key literature related to product
lifecycle analysis, user experience, and the co-creation of product value through
the UX. A methodology that can enable the integration of user experience into
the product lifecycle using multibody-based digital twins is then introduced.
Next, a case study of a 3W, 2.0-ton, EVOLT 48 forklift truck is taken as an
example to illustrate multibody-based digital-twin UX integration into the
different phases of the product lifecycle of a forklift truck, such as design and
development, production, service, and disposal. Conclusions are drawn in the
final section.
12.2.1 Multibody definition of a digital twin

Placing the digital twin at the core of the digitalization of product develop-
ment offers a way to simulate the behavior of a product over its lifecycle (Tao
et al., 2019) (Grieves, 2014). As claimed by the National Aeronautics and Space
Agency (NASA), the concept of a mobile machine twin was first introduced
in 1960 during the Apollo program (Tao et al., 2019). In that example, engin-
eers used the physical space of a space craft to analyze internal conditions.With
the development of modern computer systems and simulation methods, the
physical space is being replaced with a simulation model or virtual space. The
User experience through digital twins 149
simulation model is a representation of a physical system that can execute real-
world behaviors in a computer simulation.
Further, advanced information and networking technologies such as the
Internet of Things (IoT), artificial intelligence (AI), big data, and cloud com-
puting enable real-time information transfer between the physical and vir-
tual spaces of a digital twin (Tao et al., 2019). Considering these novel data
transfer technologies, Grieves (2014) introduced three dimensions of the digital
twin: the physical space, the virtual space, and the connections between the two
spaces. Recently, Tao et al. (2019) added data and services as a dimension of the
digital twin. These definitions, however, do not consider the physics of the real
world and user involvement in the simulation model of the digital twin.
A multibody model can be seen as a physics-based digital replica of the
physical world that can simulate working conditions and update its status con-
tinuously from multiple sources. The solution of a multibody model can be
synchronized to real-time operations. The model can be used throughout the
product lifecycle as a real-world counterpart.The multibody model may include
details of the hydraulics, electrics, mechanical actuators, tires, and physical
contacts of the system. Additionally, the use of multibody equations of motion
with state estimation theories, such as the Kalman filter, permits digital twin
data to be generated that cannot be measured directly with sensors for tech-
nical and economic reasons (Sanjurjo, 2016). By utilizing real-world identical
controls and Human Machine Interface (HMI) systems, a multibody model can
involve potential users in the working cycles of the machine.The use of immer-
sive methods in the simulation models allows stakeholders to evaluate, optimize,
and predict the states of the physical space of the digital twin. When the digital
twin has connectivity to the real world, i.e., where data are exchanged, digital
business models can be identified to generate new revenue streams and cus-
tomer value (Donoghue et al., 2019).
12.2.2 Product lifecycle

The business literature presents numerous decision and innovation process
models that describe how companies develop or should develop new products
or services. Koen et al. (2002) divides the innovation process into three
areas: the fuzzy front end, new product development, and product commer-
cialization. In most models, the UX in product development focuses mainly
on the new product development phase. However, the phase after product
commercialization can also be important for enabling companies to under-
stand how products are used (Varsaluoma, 2018). For example, companies can
benefit from understanding how to develop a positive user experience and
learning how these user-experience goals are expressed by customers over time
(Varsaluoma, 2018).
The different phases of the product lifecycle are defined in the literature in
different ways with various terms and categorizations. Grieves defined (2005)
Product Lifecycle Management (PLM) as an information- driven approach
integrating people, processes/ practices, and technologies across the entire
product lifecycle, i.e., design, manufacture, deployment, maintenance, removal
of product, and final disposal. Stark (2006) introduced the manufacturer and
user viewpoints into the product lifecycle.
The manufacturer of a product sees a product lifecycle as starting from the
generation of the product idea to its production, realization, support, and ser-
vices and finally to its retirement. The user of a product sees a product lifecycle
as starting from the acquisition of the product, continuing through its usage, and
ending at the moment when the product stops being used and is disposed of.
Terzi et al. (2010) divided the product lifecycle into three phases: Beginning
of Life (BOL) –developing and delivering the product, Middle of Life (MOL) –
operating and maintaining the product, and End of Life (EOL) –removing the
product from support and service in a controlled fashion. Donoghue et al. (2018)
have identified that companies may also have a Product Lifecycle Management
framework. This framework includes three lifecycle phases and the interactions
between the different product layers that need to be managed with different
business processes.
12.2.3 The user experience

New products may fail to meet customer and end user requirements. To avoid
such market failures, product value should be determined by users and the pro-
vider through efficient innovation interaction between the product developers
and the users (Orcik et al., 2013). In this kind of co-development, at the product
development stage, potential users can interact with the product and give
opinions about its performance based on their knowledge, skills, and experience
(Orcik et al., 2013). The experiences of users during this interaction, i.e., the
user experience, becomes a key factor to adding product value and achieving
competitive advantage (Hildén et al., 2016).
Consideration of the UX in new products can produce innovative ideas
and allow industries to discover new dimensions of their products and services.
Consequently, a UX-based approach can enhance a company’s competitiveness
and profitability and improve the quality of the products and services offered
(Orcik et al., 2013). The UX not only comprises the pragmatic functions of
the product, but also the affective and cognitive demands of end users and
customers. Affective and cognitive demands are the psychological needs, cogni-
tive capacities, choices, and emotional responses of the users (Zhou et al., 2013).
12.2.4 Co-creating product value with the UX and multibody-based

digital twins
Several researchers have implemented digital twins in immersive and interactive
environments as a part of efforts to improve user experiences at different stages
of the product lifecycle. For instance, an Augmented Reality (AR) system was
used in Schroeder et al. (2016) to display digital-twin data at the marketing stage
based on the concept of a cyber-physical system (CPS). In the work, end users
and customers had access to physical machine sensor data via web services, and
they could explore an industrial plant and its devices in real time.
In work by Laaki et al. (2019) considering the product service stage, users
were able to perform remote surgery operations by employing a digital twin
of a robotic arm in a Virtual Reality (VR) system. In the study, the VR system
was used to engage users to perform a surgery operation in the virtual envir-
onment. A physical robotic arm executed a similar operation in the real-world.
A 4G network transmitted the data between the physical and virtual spaces of
the digital twin.
In other work, VR and AR systems have been used in engineering (Posada
et al., 2015), art (Rechowicz et al., 2018), gaming (Kosmadoudi et al., 2013),
and architectural (Schroeder et al., 2016) applications at different stages of the
product life cycle. However, these digital twins were developed to serve specific
user needs, and they do not include the physics in the simulation models.
For complex machines of the type considered in this chapter, studies inves-
tigating the co-development of products using the UX and digital twins have
been limited to the product design and development phases (Auricht & Stark,
2015). To fill this gap, this study utilizes a multibody-based digital twin that can
be used to include customers and end users throughout the product lifecycle.
The digital twin enables UX information to be generated via the real-time
simulation of a complex machine.
12.3 Enabling user experiences in the product lifecycle with

an immersive multibody-based digital-twin approach
Figure 12.1 presents a multibody- based digital-
twin methodology that
could be adopted to include user experiences throughout the entire product
lifecycle. The steps of the methodology are explained in further detail in the
paragraphs below.
12.3.1 Developing a user-centered virtual space of a physical model

The multibody simulation model presents all the components and sub-
components of the physical model in a computer model. Like the physical
system, the virtual duplicate may include rigid and flexible bodies, hydraulics,
electric drives, tires, power transmission elements, forces, friction, particles, and
the HMI and controls.The multibody equations of motion include contact and
collision models to describe the dynamics of the simulation model. Following
advances in multibody formulations, standard computer systems can solve the
complex equations of motion in real time at a time step of 0.5–2 milliseconds
(Jalon and Bayo, 2012; Jaiswal et al., 2019).
In short, the multibody model simulates the realistic behavior, properties,
and physics of the real world in real time. The real-world counterpart, i.e.,
5. Real-time communication
between physical and 4. Recommended user
virtual spaces of digital experiences in
6. Product life management twin
services physical product
Enhancement of meaured data
Physical space of Virtual space of

digital twin digital twin
1. Developing a user-centered 3. User immersive

2. User selection of components methods
virtual space of a physical design data
model
Figure 12.1 Methodology to enable UX integration into the product life cycle using
multibody virtual and physical spaces of a digital twin.
the virtual twin simulation model, can exist even before the manufacturing
of the actual product in the product development and commercialization
stages. Combined with sensor data from the physical space, the multibody
simulation model guides users throughout the product lifecycle and enables
them to evaluate, optimize, control, and predict real-world working cycles
in real time.
12.3.2 User selection of component design data

Design data describing different components and sub- components of a
multibody model are collected, combined, and analyzed. Such data comprises
positions, masses, and inertias of bodies, hydraulics, electrics, power transmission
element parameters, and friction coefficients representing the physical systems.
Combining data from different sources enables designers to analyze product
performance with respect to user needs in the multibody simulation model. At
this stage, end users and customers participate in the design process and test the
features of the product in the simulation model. User comments regarding the
multibody model can help designers discover relationships between design data
and user preferences. The companies may also be able to use these relationship
patterns in future products.
12.3.3 Immersive methods for generating user input

In addition to computer system controls, multibody-based digital twins can
engage end users and customers by using immersive virtual environments. To
be able to assess the HMI and usability of the physical system, the multibody-
based digital twin can be integrated with gaming controls, simulators, VR,
AR, mixed reality (MR), and haptics. Using these external devices, user senses
and perceptions are fully immersed in the virtual environment. Consequently,
the multibody-based digital twin can perform the pragmatic functions of the
product and meet the affective and cognitive needs of end users and customers.
A number of immersive environments enabling technologies are discussed below.
12.3.4 Simulator or motion feedback platform

Real-time simulations can be done in simulators to provide end users and
customers with a cockpit experience. Physical system controls and ergonomics
can be constructed on the simulator such that the HMI of the simulation cor-
responds to real world experiences.The simulator machine can also be equipped
with a motion feedback platform to provide the feeling of the terrain path in
the simulation. Additionally, using a cave-like environment, where extra display
screens on the moveable platform immerse the human body in the simulation,
can give users a more intensive visual experience. This virtual environment can
give users a more realistic experience with VR/AR glasses.
12.3.5 VR, AR, mixed reality glasses, leap controllers and haptics

End users and customers can be immersed into a virtual world through a head-
mounted display (HMD). These VR, AR, and mixed reality glasses take the
human inside the virtual space. Using these external tools, users can gain a
deeper understanding of the real-world counterpart and its environment. Many
types of HMD are available on the market, such as the HTC Vive system and
Oculus Rift and XR-1 glasses. Several immersive devices could possibly be
integrated into a real-time simulation to provide a user-immersive environ-
ment. Leap controllers and haptics further enable users to perceive a more real-
istic experience in the simulation environment.
12.3.6 Manufacturing of the physical product

The manufacture of the physical product can be planned based on the
experiences and recommendations of the users of the virtual product. User
experiences related to the dynamics of the simulation model are added by means
of actuators, controls, and sensors. The physical model may contain hydraulics,
electrics, pneumatic and mechanical actuators, and tires to execute requests
made by users of the multibody model in the immersive environment. Sensors
can collect physical product data and input it into the simulation model. This
model can be used in the service stage of the forklift, as shown in Figure 12.1,
where the virtual replica of a physical 3W, 2.0-ton, EVOLT 48 forklift in a VR
environment is presented. User experiences in the physical version of the fork-
lift can also be tracked in the reference link (EDiA, 2019).
12.3.7 Real-time communication between the physical and virtual

spaces of the digital twin
Before the release of a new product that has been developed based on user
experiences, the physical and virtual spaces need to be interconnected so that
digital twin information can be used in different phases of the product lifecycle as
needed by end users and customer. Network communication, cloud computing,
and network security are the key enabling technologies for transmitting data
back and forth between the physical and virtual twins. Physical product sensor
data is stored in data cloud storage using network technologies such as quick
response (QR) code, radio frequency identification (RFID), barcodes, wireless
fidelity (Wi-Fi), Bluetooth, etc. The data can be accessed via the 4G network.
The multibody model enables end users and customers to monitor, coordinate,
and control the real world of the digital twin.This data communication must be
secured for successful management of product lifecycle related services.
12.3.8 Product life management data

The multibody-based digital twin generates big data during the service and
end of life phases, and this data can spur development of new product-related
services. The data can include product component data, product-environment
interaction data, environment data, product user data, and control data. As
mentioned earlier, the data can be used in the real-world counterpart with
the aid of sensors and IoT services in real time. By using VR/AR immersive
technologies, the multibody-based digital twin enables users to predict, opti-
mize, simulate, and experience the states of the physical space with contact and
collisions in the environment during the product’s life. For instance, product
component data can notify stakeholders of the need to take actions related
to predictive maintenance of the product. Similarly, using product state data,
more precise decisions about the reuse or retiring of a product can be taken.
Additionally, industry can utilize user experience history from the lifecycle of
previous multibody-based digital twins in future products and other projects to
gain competitive advantage.
12.3.9 Enhancement of measured data

Due to integration of the equations of motion with a state observer estimator,
the multibody simulation can provide information about the internal states of
the system based on a smaller amount of sensor data from the physical system
(Sanjurjo, 2016). In this way, the multibody-based digital twin can provide
detailed information about the state of the physical system, which in some cases
can reduce sensor costs. The multibody-based digital twin can reduce the cost
of management of many digital product processes compared to conventional
digital twin technologies. For instance, it is possible to predict the wear and tear
of tires from accurate information about vehicle tire friction.
12.4 Industrial case study: the UX in different phases of the

product lifecycle with a multibody digital twin
The case company of this study wants to explore the possibilities of using
digital technologies, especially digital twins utilizing VR technologies, to inte-
grate end users and customers into the management of the product lifecycle.
The case company has identified the following challenges.
• Co-developing new products with users to strengthen the customer feed-

back loop and include innovative ideas in the final product will require a
new approach.
• Because the manufacturing, testing, remanufacturing, and retesting of the
prototype demands significant time, money, and effort; product lead time
to market can be long.
• New materials and manufacturing solutions must be developed to accom-
modate the product’s operation in different working environments.
• Repair and maintenance services to end users and customers will be
required to gain a competitive advantage in the market.
• Decisions regarding the reuse or disposal of products in an eco-friendly
way for a safe working environment will have to be worked out with
potential users.
In this study, these challenges have been addressed by developing and

implementing a multibody- based digital twin of a 3W, 2.0- ton, EVOLT
48 counterbalance forklift. A parameterized real- world counterpart of the
multibody forklift model was prepared using multibody equations of motion.
The digital model included actual physical dimensions, hydraulics, electric
and mechanical actuator data, tires, and contact parameters for a realistic user
experience in the real-time simulation. A motion feedback platform and VR/
AR immersive methods tightly integrated the twins and allowed end users and
customers to experience the functions and behavior of the forklift in the digital
world. The following subsection details the integration of users in the forklift
lifecycle using a multibody-based forklift simulation model.
12.4.1 New product development approach: user co-creation of a new

forklift mast system in the virtual space
The main challenge faced by the case company is to shorten the product
development process while simultaneously including end users and customers
in co-creation of product value. The case company currently uses a physical
prototyping method to develop new products. In this approach, end users and
customers test physical prototypes after manufacturing, which increases product
development cost, and the effort and time required. Customers and end users
can only comment on the performance of the product after purchase, which
extends the customer feedback loop. The multibody simulation permits end
users and customers to directly test the new product developed by the company.
This UX-driven approach was used in the development of the 3W, 2.0-ton,
EVOLT 48 counterbalance forklift. The approach is presented schematically
in Figure 12.2. Important user experiences related to the forklift are listed by
number.Two-sided arrows highlight the integration of end users and customers
through the multibody virtual space with the product development team.
As Figure 12.2 illustrates, end users and customers directly participate in
the product development process and comment on the performance of the
forklift. Important UX elements related to the forklift are driving experience,
mast system loading and unloading, visibility through the mast system, mast
wobbling, 360° electric steering, forklift stability, forklift controls and ergo-
nomics, and the working environment of the forklift. The forklift can lift a
3. Visibility through
mast
2. Mast system 4. Mast

loading and wobbling
unloading
1. Driving 5. Driver
Multibody virtual
experience space ergonomics
customers
8. Forklift stability in 6. 360° electric steering

turning operation system
7. Testing forklift in
different environments
Figure 12.2 UX-driven product development of a 3W, 2.0-ton, EVOLT 48 counterbal-

ance forklift using multibody real-time simulation.
maximum of 2000 kg. The driving experience includes forklift forward and
backward movements and the braking action. The stability of the forklift under
minimum and maximum loads while turning was tested by users in the simu-
lation model.
Another UX-related aspect is the smooth reduction of speed going into
corners and the smooth increase on exiting corners. Agility and the ability to
turn quickly as well as turning circle are also important. Finally, the visibility and
clarity of the displays used is a further important aspect of user experience. The
loading experience is how the mast behaves under load. An important behavior
mentioned was the smoothness and accuracy of the lifting. Smoothness corres-
ponds to continuous movement or extension of the mast when the operator
uses the switches. Additionally, mast wobbling provides users and customers
with a realistic experience in the real-time simulation.
12.4.2 Commercialization: user testing of the parameterized

model in different environments
Because of its physical prototype culture, production and development of
iterations of the physical prototype take time within the case company so
product lead time to market is long. Furthermore, new products are often
introduced after a significant drop in product sales. This culture hinders the
case company from achieving a sustainable business model in a competitive
environment.
By implementing a multibody digital twin, as shown in Figure 12.3, the
company can involve the end users and customers with continuing devel-
opment of the 3W, 2.0-ton, EVOLT 48 forklift during the marketing stages.
From many options, end users and customers can select the best combination
of forklift machine and mast system on the motion platform. Using VR/AR
immersive technologies, end users and customers can test each new product
configuration in simulated working environments as per their needs and future
requirements. By respecting the user choices and needs in the virtual model,
the case company avoids physical prototyping, which reduces the product lead
time to the market.
Additionally, for product commercialization, the use of the simulation for
marketing, sales, and training can be seen as offering improvements from both
the cost and time perspective and establishing a positive customer experience
(Donoghue et al., 2018). The added value is to offer a continuous journey from
marketing to delivery and training (Donoghue et al., 2018).
12.4.3 Manufacturing: utilizing the user-based multibody model

in production
Using the multibody digital model, industrial companies can prepare materials
charts and machine components for use in the simulation world. The end users
and customers choose optimum materials and components when designing a
Multibody virtual space of 3W 2.0 Multibody virtual space of 3W 2.0

ton EVOLT48 in LUT University ton EVOLT48 in warehouse
End users and

customers
Simplex mast Duplex mast Triplex

T riipllex mast
mastt
Figure 12.3 Accelerating the marketing process of the 3W, 2.0-ton, EVOLT 48 forklift
with the introduction of a multibody simulation model.
machine configuration as per their needs in the working environment. Based

on the selected configuration, parameters can change in the real-time simu-
lation. In this way, end users and customers can test a wide range of different
configurations on the simulator. Following selection by the user, the manufac-
turing company can order the appropriate raw materials and components for
manufacturing and production of the final product. Furthermore, end users
and customers can track the status of manufacturing via an online portal with
a private radio frequency identification (RFID) or barcode provided by the
manufacturing company.
12.4.4 User-related product services in the operation phase: updating

the virtual space of the digital twin with real-world information
Based on the exact machine dimensions and features selected, it is possible to
support users in the commissioning and delivery of the physical version of the
digital twin. In addition, the real-time multibody-simulation-driven motion
feedback platform can be used to provide training services even before the start
of manufacturing of the physical product. As mentioned earlier, a real-time
secured connection is built between the virtual and real-world spaces of the
digital twins to monitor, optimize, and predict field data. For instance, decisions
about predictive maintenance of hydraulic systems can be made by collecting
sensor field data. In such an approach, the lifecycle efficiency online system
analyzes the sensor data and calculates the lifetime of the hydraulic cylinders
(Mevea, 2019). Similarly, the digital version of the twin can be used remotely to
monitor and control real-world operations in difficult and dangerous working
conditions (Mevea, 2019). The multibody-based digital twin will ensure the
safety of workers and improve quality, productivity, and performance of indus-
trial operations. The overall cost of multibody digital driven product processes
can be much less than conventional product processes.
12.4.5 End of product life: retiring the product based on user data
generated in the digital twin
As noted earlier, one challenge when using conventional methods is that users
and manufacturers do not have a direct relationship during product develop-
ment or during product use. Manufacturers are compelled to make independent
decisions about the retirement or repairing of the physical product. Real-time
simulation enhances product lifecycle management by building a relationship
between the manufacturer and users as the multibody-based digital twin con-
tinuously receives real-time updates from the real world from sensors, the IoT,
cloud computing, and network security services. Therefore, the manufacturer
can inform users about poorly functioning parts, and the users and manufac-
turer can cooperate on maintenance of the physical version of the multibody-
based digital twin, if necessary. Finally, if the physical product is no longer fit for
further work, users and manufacturers can together agree on a retirement date
for the physical product to ensure a safe working environment.
12.5 Conclusion
Utilization of a multibody-based digital twin makes it possible and straight-
forward to integrate end users and customers into the various phases of the
product lifecycle. The direct involvement of users in the product development
process enables companies to codevelop appropriate and competitive products.
Replacing the physical prototype culture can considerably reduce product lead
time to market, which enables companies to gain a real competitive advan-
tage. Real-time communication between the physical and virtual parts of a
digital twin, in turn, can enable companies to optimize the working cycles of
the physical product. Additionally, for work in dangerous conditions, end users
and customers can control the working cycles of the physical product remotely
using the multibody-based digital twin.
The valuable real- world data generated by integrating the physical and
digital twins enables monitoring of degrading or malfunctioning parts of the
physical product, thus allowing them to be used optimally before being repaired
or replaced, which reduces maintenance costs. Timely removal of worn parts
can also lead to reduced energy consumption. Furthermore, the prediction of
breakdown or maintenance needs can help end users in decision making and
reducing downtime.
The multibody-based digital twin can be integrated into different infor-
mation technologies such as the IoT, big data, artificial intelligence, machine
learning, cloud computing, etc. to provide additional services. Moreover, the
multibody digital twin data can assist stakeholders dispose of products in an
eco-friendly and efficient way. Finally, the multibody digital twin and user data
can be used by companies to develop more user-and environmental-friendly
products, as well as products that are compatible, competitive, and adaptable.
Ultimately, the engagement of end users and customers throughout a product
lifecycle by utilization of a multibody digital twin can enable companies to
achieve sustainable business models in a competitive market environment.
Acknowledgments
This study was part of the DigiPro project and has received funding from
Business Finland and the SIM (Sustainable Product Processes through
Simulation) research platform of Lappeenranta-Lahti University of Technology
LUT, Finland. The authors would also like to thank the companies involved for
their cooperation. We would like thank Dr. Emil Kurvinen for contributing in
reviewing the idea of user experiences in the product lifecycle. We also like to
thank Mevea Ltd. and Rocla Oy for giving permission to use data from their
website.
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Part IV
Value for business

13
The digital twin combined
with real-time performance
measurement in lean
manufacturing
Mira Holopainen, Juhani Ukko, Minna Saunila,
Tero Rantala and Hannu Rantanen
13.1 Introduction
Lean production refers to a business philosophy that aims at eliminating waste
and creating value (Womack and Jones, 1996). According to van Assen and de
Mast (2018), visualization plays an important role in Lean production. In fact,
in their article they say that the application of visual controls and techniques is
a marked feature in Lean. One of the most prominent visualization techniques
used in modern production is the digital twin, which is a digital replica of
a product, process, or system. Effective application of modern visualization
techniques such as the digital twin can improve the transparency of manufac-
turing processes, influence people’s behavior, enable continuous improvement,
encourage shared ownership, and support management by providing more
accurate information (Tezel et al., 2009).
The rise of new visualization techniques such as the digital twin provides
new platforms that can also enable performance measurement systems to react
more rapidly (cf., Horváth and Szabó, 2019;Yin and Qin, 2019). Other studies
have focused on the importance of visual performance measurement to lean
manufacturing and continuous improvement (Eaidgah et al., 2016; Bititci et al.,
2016; Tezel et al., 2009). The utilization of visualization as a part of manage-
ment activities of companies also promotes communication (Larsson et al.,
2017; Bititci et al., 2016; Eaidgah et al., 2016) and can enhance information
flow (Eaidgah et al., 2016). In addition, the utilization of visual management
systems can support ongoing strategy development and implementation, facili-
tate performance measurement activities, and enhance collaboration (Bititci
et al., 2016).
Implementing digital twins offers a number of advantages that can improve
the management practices of manufacturing companies in general (Liu et al.,
2019; Min et al., 2019; Wang et al., 2019; Zhou et al., 2019). However, research
into the advantages that digital-twin-based real-time performance measurement
166 Mira Holopainen et al.
can bring to lean processes is lacking. Thus, the purpose of this chapter is to
explore the benefits of digital twins and real-time performance measurement
in the lean processes of a manufacturing company. By examining the processes
of an assembly manufacturing company as a contextual example, this chapter
focuses on the potential benefits of using digital twins from the perspectives of
the subject case company’s maintenance services process and its stakeholders.
Looking at the empirical real-life case will make it possible to gain an in-depth
understanding of the advantages that the utilization of digital twins and real-
time performance measurement provide.
The rest of the chapter is structured as follows. First, the contextual back-
ground of the chapter is presented including literature from lean management
and lean processes, as well as from performance measurement and the utilization
of digital twins as a part of performance measurement activities. Presented next
are the empirical examination of the digital twin and real-time performance
measurement application and the methodological choices and data gathering.
Finally, the results are presented and discussed before offering conclusions.
13.2 Context and background
13.2.1 Lean approach and performance measurement

Lean thinking is about eliminating waste and creating value.Womack and Jones
(1996) summarized the lean approach as five key principles: specifying value,
identifying value streams, making value flow (by eliminating waste), letting
the customer pull value, and pursuing perfection or continuous improvement.
In turn, Pavnaskar et al. (2003) claim that true advances, however, come from
exposing manufacturing waste. For this purpose, Shingo (1992) identified seven
different types of manufacturing waste: overproduction, waiting time, transport,
inventory, motion, defects, and processing. Similarly, Shah et al. (2003) showed
that the lean production philosophy focuses on avoiding seven cardinal wastes
and on respecting customers, employees, and suppliers (Schonberger, 1986). In
this study, the focus is both on the processes (eliminating the waste) and on pro-
moting the daily work of employees and management and improving customer
relationships.The lean approach aims to shift responsibility to lower levels rather
than depending on direction from leadership. It promotes a team-based multi-
talent work environment to ensure operational flexibility, and it encourages
continual training, learning, participation, and empowerment (Olivella et al.,
2008). According to Eaidgah et al. (2016), taking information to the process
owner level can impact daily workflow by giving workers more responsibility
for their own processes, enabling their participation in decision-making, and
encouraging them to participate in continuous improvement projects.
Adopting lean processes requires big changes to the management of
operations and production. For best success, management practices, methods,
and tools should be completely overhauled. Vartiainen (2007) suggested that
adapting to new working methods means adjusting the physical environment
Real-time performance measurement 167
to meet the requirements of the task, enabling the digital environment to use
different spaces and make knowledge and information sharing possible, and
altering the social environment to support the new working methods.
In this context, performance measurement systems are also needed to rapidly
adjust to the changes in the operating environment brought about by adopting
lean processes. The performance measurements should ensure the company
achieves its purpose, plans and targets, and organizational control. Any process
in which a person (or group of persons) intentionally affects what another
person, group, or organization will do should be monitored (Tannenbaum,
1968). According to Nudurupati et al. (2016), performance measurement
systems must be more dynamic to respond to constant changes in the external
environment. They explain that organizations must deal with different varieties
and volumes of data to gain a competitive advantage, which forces them to
refocus their measurement efforts to include evaluation of performance over a
wider network involving various stakeholders.Traditionally, performance meas-
urement has suffered from an inability to capture real-time data to represent
actual situations (Hwang et al., 2017). In general, there seems to be a consensus
that the fundamental purpose behind performance measurement may be chan-
ging. The emphasis on control is diminishing, and the emphasis on learning is
increasing (Bititci et al., 2012).
13.2.2 Digital twins and performance measurement

The rise in digital technologies, such as digital twins, makes available new
platforms to enable the rapid reactive ability of performance measurement
systems to facilitate learning (Horváth and Szabó, 2019; Yin and Qin, 2019).
According to Horváth and Szabó (2019), for example, applying continuous
real-time performance measurement data to corporate managers can improve
their decision-making and the quality of their employee and company per-
formance appraisals. Yin and Qin (2019) suggest that a smart performance
measurement system may provide flexible and customized operation as well as
interoperability and intelligent real-time feedback features to measure, monitor,
and improve collaboration in product design. In general, there has been scant
empirical research into how the new digital technologies, such as digital twins,
support the way organizations measure performance. Most digital twin studies
focus more on the engineering of the platform and less on its application
(Martinez et al., 2018). However, there is some empirical evidence revealing the
general level benefits of digital twins.
Defined as the digital replica of the physical assets, digital twins provide
huge potential for interoperability and fusion between the physical world and
the digital world of production (Liu et al., 2019). Digital twin models assist
companies in adapting to the changing operating environment (Qi et al., 2018;
Min et al., 2019), making decisions (Liu et al., 2019;Wang et al., 2019), reducing
design time (Tao et al., 2019; Zhong et al., 2015; Wang et al., 2020), optimizing
production (Zhong et al., 2015; Qi et al., 2018; Bao et al., 2019; Min et al., 2019;
Wang et al., 2019; Zhou et al., 2019), and improving financial value (Zhong
et al., 2015; Min et al., 2019). Tao et al. (2019) present that the digital twin
is mostly used for fault diagnosis, predictive maintenance, and performance
analysis. Relatively few efforts have been devoted to more innovative design
processes or innovations. Zhou et al. (2019) suggest that production optimiza-
tion can be accomplished via an intelligent analysis and decision-making pro-
cess enabled by dynamic knowledge and skills.
Information collected and stored by a digital twin is presented in a digital
form to discover, analyze, manage, and optimize to improve production per-
formance (Bao et al., 2019). Digital twins reduce challenges caused by physical
distance and thus assist in detecting machinery status and monitoring compo-
nent health (Qi et al., 2018). A digital twin also facilitates customer engagement
by giving them the opportunity to see both the physical and digital version
of a product (Tao et al., 2019). This engagement reduces design time, because
product details are shared with customers early on giving them the opportunity
to influence development and ensure the product fulfills their requirements
(Wang et al., 2020).
13.3 Methodology
This chapter explores the benefits of the digital twin and real-time perform-
ance measurement for a lean manufacturing company. The research was based
on a qualitative case study conducted with a Finnish assembly manufacturing
company. A qualitative research approach is appropriate when the study focuses
mainly on the perceptions and experiences of people. Empirical data were
gathered in 2019 using several qualitative data collection methods including
focus groups, semi-structured interviews, observation, and the utilization of
secondary data.
A player in the drive technology industry, the subject company delivers
customized drive technology solutions to its customers. This includes mainten-
ance services and products from other OEMs. Maintenance services represents
a significant and continuously growing share of the annual turnover, which is
about 41 million euros at present. This research study focused on the main-
tenance service process for gear motors and industrial gear units. The process
comprises many different steps, beginning with the customer service request and
product receipt and ending with product delivery and billing. Responsibility
for carrying out these steps is shared among various departments. Significantly,
suppliers and customers also influence the process.
Data collection for the study was divided into four main phases: two focus
groups, observation and utilization of secondary data, and semi- structured
interviews.The research process began with two focus group meetings between
representatives from the subject case company and the research group to discuss
the context and the planned content of the research. This was followed by two
weeks of observation by the research team of the maintenance services process.
This observation and utilization of the company’s own secondary data helped
the team to develop a preliminary understanding of the process steps and the
current state of the maintenance services process and subsequently identify
any process development needs. The last phase, semi- structured interviews
complemented this view.
The aim of the interviews was to collect information on the current state
of the maintenance services process, establish a possible target level for the
maintenance services process, and define the benefits to the company of the
digital twin and real-time performance measurement. Initially, the focus was
on what kind of information is needed by workers and management from
different departments within the company and what challenges are faced in
daily operations. At the same time, a possible target state was defined. Target
definition focused on getting information from the interviews on how workers
want to carry out daily operations, what kind of process information they
would want to see, and what would be possible indicators to monitor and
control processes in real time. Finally, the last part of the interview explored
the benefits of the digital twin and real-time performance measurement of the
maintenance services process for the company, its employees, and management.
In total 13 interviews were carried out in the offices of the subject com-
pany to learn about their maintenance services process steps from different
department level perspectives and to ensure that worker voices were being
heard. Representatives from the operational level, sales, and management were
interviewed. More specifically, the interviewees included two service technicians,
two service engineers, one dispatcher, one service manager, two sales engineers,
two area sales managers, one sales manager, one factory manager, and the CEO.
All interviews were recorded and transcribed. Interview durations were from
40 min to 80 min. After collection, data were analyzed independently by a
single researcher, and then the research group as a whole discussed the results to
establish a common view. Finally, the results were discussed with the company.
13.4 Advantages of the digital twin and real-time

performance measurement
A digital twin provides real-time information about process operation; the
current state of the process, its history, and possible future directions.This chapter
examines, how real-time performance measurement of the lean process and
process information could improve operational process performance, support
Lean principles, and promote the daily work of employees and management.
The advantages that a digital twin and real-time performance measurement
brings to the subject case company are examined from the perspectives of the
stakeholder and the process.
13.4.1 Advantages to stakeholders

Real-time lean-process performance measurement and process information can
be used for different purposes. With a digital twin, the company can monitor
• A tool for daily management

• Facilitate sharing of responsibility and control
• Support fact-based management
Management •
•
Support decision-making
Facilitate the management of operations
• Give better understanding of the company`s current situation
• Improve information retention

• Improve and harmonize understanding and facilitate communication
• Increase collaboration and integration among workers and different departments
• Motivate
Worker • Support learning
• Help focusing attention on the right things
• Promote the achievement of goals
• Improve customer relationships

• Speed up customer response time
Customer •
•
Improve understanding
Increase customer satisfaction
• Increase customer value
Figure 13.1 The advantages of the digital twin and real-time performance measurement
to company’s stakeholder.
and control the maintenance services process and its performance in real time.
This solution will give stakeholders better information visibility and give better
accessibility to management, sales and customer service, process planning and
scheduling, and operational workers. In the following paragraphs, the focus is
on how a digital twin and real-time performance measurement can improve
the daily work of employees and management and promote better customer
relationships. Figure 13.1 illustrates the benefits to the stakeholder.
13.4.1.1 Management
In the subject case company, the digital twin and real-time performance meas-
urement were regarded as a daily management tool to support everyday man-
agement by providing real-time information of the process and its performance.
The digital twin and real-time performance measurement of the process were
also seen as part of Lean manufacturing, supporting the accomplishment of
Lean principles, and sharing responsibility with lower levels:
It helps with daily management, because the idea is not that management tells every-
body to do something, but rather that we have a process, everyone has a role to play
in it, and then with visualization and Lean, everybody can see what is really going
on and react to it.
In addition to the above, the digital twin and real-time performance meas-
urement was seen to support fact-based management, facilitate the sharing of
responsibility and control of the process, support decision-making, facilitate
the management of operations, and give better understanding and knowledge
of the subject company’s current situation. With help from the new visualiza-
tion techniques, management enjoyed easy access to the real-time information
about the process and its performance regardless of time and place covering
areas such as maintenance products information, their lead times and target
times information, information about the process work load and resources,
warehouse information, employee information, and so on.
13.4.1.2 Worker
Interviews revealed that the digital twin and real-time performance measure-
ment of the process enables worker engagement in the lean process by giving
transparent information of process performance. The benefits for the workers
were classified into the following:
• improving information retention,

• improving and harmonizing understanding,
• facilitating communication,
• increasing collaboration and integration among workers and different
departments,
• motivation,
• supporting learning,
• focusing attention on the right things, and
• promoting the achievement of goals.
One of the interviewees described the improvement in information retention

as follows: “If I see a green or red ball, I still remember it in my dreams, but if I see black
text on white background, I forget it easily.”
In the subject case company, workers face information and communication
challenges. The information, such as lead times, is monitored manually and on
a case-by-case basis. In some cases, the correct information is hard to find, it is
scattered across different locations, and the reliability of the information may be
poor. Communication between departments regarding process operation was
also perceived as challenging. With the digital twin and real-time performance
measurement, essential real-time information is found in one system, solving
many of the communication challenges. “With digital twin and information visu-
alization, we would speak the same language about things. We don’t need to speculate
about things, and it could help us to understand each other better.”
The digital twin and real- time performance measurement also helped
workers to focus their attention on the right things and better achieve goals
such as maintenance lead times. “When you could see are you on the way achieving
goals, you could personally lead your own work to make it.” In the subject case
company, the achievement of lead time goals is linked to reward systems. With
the digital twin and real-time performance measurement, goals become more
transparent to every worker, enabling workers to see the impact of their own
contributions to achieving them. This also increases worker motivation and
efficiency.
13.4.1.3 Customer
Creating value for the customer is one of the key principles of Lean. In this
paragraph, the discussion is about how the customer benefits from the imple-
mentation of a digital twin and real-time performance measurement. The
implementation potentially impacts customer relationships, understanding the
process from the customer’s perspective, shortening customer response times,
and increasing customer value and customer satisfaction. The digital twin and
real-time performance measurement helps to develop customer relationships.
If customers come to visit us, they will see from our metrics that our delivery times
have been met, how much goods we have and have left, and so on. Visualization
would also make it easier to present our working spirit for visitors.
In addition, they help to meet customer performance challenges in the com-

pany, such as slow customer response times. “Perhaps even the customer could be
shown statistics on their maintenance service, such as what’s the benefit of their faster
response time, so they can improve their own efficiency, when answering to our questions.”
13.4.2 Advantages by process perspective

The benefits of the digital twin and real-time performance measurement were
also considered from the process and the company perspective. From the pro-
cess development point of view, this distinction was particularly important. By
enhancing the performance of the process, cause-and-effect relationships can
be identified and marked for improvement to improve the overall performance
of the company. Figure 13.2 illustrates the benefits of the digital twin with
respect to the performance of the maintenance services process for the subject
case company.
According to the case study, many process benefits can be achieved through
implementation of a digital twin and real-time performance measurement.The
digital twin and real-time performance measurement of the process improves
process monitoring and control, helps detect problems and enhance response
to those problems, improves security of supply, facilitates anticipation, reduces
errors, increases transparency, improves flow, saves time and resources, supports
continuous improvement, helps detect causal relationships, reduces useless
communication, improves access to information, and simplifies the process by
making it more visible. One of the most important of these benefits is the
improvement of process monitoring and control, which can be seen linked
to other benefits. Enhancing process monitoring and control can also help in
meeting the performance challenges of the maintenance services process, such
as difficulties in finding the right information and achieving reliability targets,
newgenrtpdf
Process
More effective process monitoring and control
Helps to detect Supports Reduces useless Simplifies the

Improves security Improves flow of
problems and Reduces errors continuous communication process
of supply the process
faults improvement
Enhances Improves Helps detect

Facilitates Saves time and Improves access
response to transparency causal
anticipation resources to information
problems of the process relationships

Company
Increase
Increase Increase Increases
customer
efficiency productivity profitability
satisfaction
Improves overall performance
Figure 13.2 The advantages of the digital twin and real-time performance measurement to the performance of the process and the
company.
traceability challenges of the different factors, such as lead times, communica-
tion and information sharing challenges between departments, and achievement
of the performance goals.
In the subject case company, process monitoring is currently done manually,
which takes time and resources and leads to the introduction of errors.With the
digital twin, monitoring and control is more automated, and resources can be
freed up and allocated to core operations. The potential benefits for the subject
case company are not mutually exclusive. For example, more efficient process
monitoring can also lead to faster delivery times, which in turn can contribute
to increased customer satisfaction and value. Improving the process with digital
twin and real-time performance measurement can also impact efficiency, prod-
uctivity, and company profitability as well as its maintenance service, eventually
leading to an overall performance improvement.
13.5 Conclusion
This chapter reports on a qualitative case study that was conducted with the
cooperation of a Finnish manufacturing company. The purpose of the study
was to explore the advantages that a digital twin and real-time performance
measurement offers for the Lean manufacturing process. The study focused on
these benefits from the perspectives of the subject case company’s mainten-
ance services process and its stakeholders. The study’s main contributions are
as follows.
Firstly, the study shows that the digital twin and the real-time perform-
ance measurement improved the maintenance services process. According to
the results, the main benefits were improved process monitoring, control, and
transparency.The results also reveal that the digital twin and real-time perform-
ance measurement of the lean process positively impacted the quality of lead-
ership and customer relationships. Secondly, the digital twin implementation
facilitated operational level performance measurement by providing real-time
material and information management about the order-delivery process. This
was realized via the digital twins, because they enabled worker engagement in
the lean process, increased collaboration and integration among different levels,
and facilitated communication. These will potentially affect productivity, prof-
itability, and finally overall performance.
In terms of managerial implications, what has been learned suggests that
to maximize benefits and support Lean principles, the digital twin and real-
time performance measurement must be linked to continuous improvement
projects. In the subject case study, only one process was considered, however,
the digital twin and real-time performance measurement can also be used
to develop the company’s other processes. Also, the benefits of digital-twin-
based real-time performance measurement can be enhanced by integrating the
system with other company systems. Further research considering the imple-
mentation of a digital twin is recommended to determine the added value of
digital twinning and real-time performance measurement to the company’s
maintenance service. Further studies could also examine the characteristics and
uses of digital twins with larger data sets.
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14
Using real-time simulation
in company value chains and
business models for value creation
Maya Kristina Cheikh-el-Chabab, Olli Kuivalainen,
Ulf R. Andersson, Roope Eskola and Aki Mikkola
14.1 Introduction
In today’s rapidly changing global markets, industries are becoming not only
interconnected, but also interdependent. Digitalization and globalization are
increasing the pressure on companies to remain competitive to survive. Merely
adapting technology is not enough. Companies must also understand business
trends and the complexity of modern technology. Digitalization, in particular,
has resulted in rapid development and a new complexity in electronics that is
challenging upper and middle management to gain a better understanding of
the new and emerging needs of their businesses.They must adapt by innovating
and updating their business models to ensure their companies can fully benefit
from the new technologies and offer their customers better value. Only a small
percentage of companies believe existing business models will be sufficient to
keep them profitable and economically viable as their industries continue digit-
alizing course and speed (Bughin et al., 2018).
Revolutionary changes in business come about whenever growth of global
innovation and competitiveness gives rise to advanced technologies that offer
substantial benefit to industry. The introduction of water-and steam-powered
mechanical manufacturing at the end of the 18th century (i.e., the “first wave”
or industrial revolution), the division of labor in the beginning of the 20th
century (i.e., the “second wave”), and the appearance of programmable logic
controllers for production-process automation in the 1970s (i.e., the “third
wave”) were the main influencers of such revolutions (Brettel et al., 2014). The
latest transformations have introduced the business world to a whole new pos-
sibility of interactions between humans and machines in a cyber-physical world
through a large network bringing upon a “fourth wave”.
Industry 4.0 refers to the emergence and diffusion of a range of new digital
industrial technologies, e.g., in relation to automation and data exchange
in manufacturing technologies (Strange and Zucchella, 2017; Hannibal and
Knight, 2018). In addition to technological innovations, companies have also
had to undergo a huge shift in their organizational structure to cope with
the new market complexity. Scholars have also recognized a shift from mass
178 Maya Kristina Cheikh-el-Chabab et al.
production to customized production, moving toward the co- creation of
products with customers and that transformation’s potential effects on value
propositions and business models. This chapter examines real-time simulation
as a result of the fourth wave of industrial revolution that has been triggered
by the internet.
Real-time simulation is an important result of this latest revolution. It is
a technology that is evolving rapidly and finding its way into specific indus-
trial applications, because real-time simulation and its accurate physics-based
representations resolve real-time problems by producing meaningful and timely
information about product behaviors (Mevea, 2018a; Jaiswal et al., 2019). Real-
time simulation can accurately predict –in real time –the dynamic behaviors
of complex mechanical systems, such as mobile machines (Khamim et al., 2018).
Real-time simulation techniques are being applied to develop advanced oper-
ator training simulators (Mevea, 2018a). Furthermore, several manufacturing
companies use real-time simulation to improve their production processes,
and real-time simulations can serve as a vehicle to demonstrate to potential
customers the technical features of a product. Consequently, new applications
in product development and beyond are emerging that account for the needs
and wants of both customers and operators throughout the whole value chain
process, a critically important benefit.
The possible next step is taking simulator-driven design methodologies to
a new level by developing real-time simulator-driven processes. This devel-
opment will provide visibility and accessibility to multiple stakeholders in
every part of the product lifecycle and therefore enhance the potential of new
business models to drive increased competitiveness. However, this new field of
technology is not fully mature and is currently only being applied in limited
cases, so there are many benefits yet to be discovered and proven.
This chapter describes how incorporating real-time simulation in different
value chain processes can affect business models and benefit various stakeholders.
The primary objective is to explain how real-time simulation tools can increas-
ingly represent real-world functionality in today’s businesses and emerging
industries. This innovation has increased global competition to raise product
quality and lower production costs and has ensured real-time access to rele-
vant product and production data for the involved parties.Therefore, companies
are weakening the barriers to participation in their product development and
support processes and giving multiple parties better access to data by exchan-
ging it through autonomous systems embedded throughout the entire value
chain (Brettel et al., 2014). To cope with these technological changes, industries
have had to evolve and face the changing market. In this new environment, they
are having to think more about creating value based on real-time simulation.
14.2 The effect of digitalization on the market

Impacting how companies do business, digitalization has launched a number
of new trends. To better understand these trends, a better understanding of
Real-time simulation in value creation 179
digitalization is needed. Some managers view digitalization as an upgrade of
what their IT functions do for the company. Others are interested in digital
marketing and sales. Bughin et al. (2018) defined digitalization as “the nearly
instant, free, and flawless ability to connect people, devices, and physical objects
anywhere”. I-SCOOP (2019) referred to digitalization in business as enab-
ling, improving and/or transforming business operations, business functions,
business models and processes, and activities by leveraging digital technologies
and making broader use of digitized data by turning it into actionable know-
ledge with a specific benefit in mind. This definition takes into consideration
the importance of data gathered from different digitalization means. Other
definitions have included the environmental aspect of digitalization and the
adoption of digital technologies across all possible societal and human activities.
However, in this chapter, the focus is on the definitions proposed by Bughin
et al. (2018) and I-SCOOP (2019).
In 2018, CIMdata published an eBook entitled Digital Twins: Changing the
Way We Engineer Validate, Market, and Operate our Products. The book introduced
four different trends in business launched by digitalization (CIMdata, 2018).
The first is increased complexity, whether in product or ecosystem.1 Product
complexity does not only come from an increased number of assemblies, but
also from current customer expectations when using electronics, software,
and embedded systems, all of which are taken for granted. In addition to an
increasing need to interconnect technologies, ordering and manufacturing
are being challenged to meet sustainability conditions. As for ecosystem com-
plexity, this phenomenon is shown in digitalization covering the entire product
lifecycle process. Environmental responsibility is on one side and social respon-
sibility is on the other as companies manufacture products that are increasingly
interconnected to meet society’s needs.
The second trend is giving the customer more choice. Today’s customer
demands flexibility and is given a wide range of choices, if not a fully customized
product or service. Since companies are gaining access to much better means,
materials, and solutions; customers expect reliable products of superior quality
that have been well tested before product launch. Customers are also partici-
pating more in the feedback process and codeveloping products by providing
improvement ideas. And, more companies are expected to provide customers
more involvement opportunities.
The third trend is digitalization competitiveness, where companies not
only focus on bringing improved and well-tested products to market, but they
also focus on doing it quickly, responding rapidly to market changes to stay
competitive in their field. CIMdata explained that virtual capabilities must be
applied at all stages of the engineering process, from inception through product
development to manufacturing to service. This requires data and process man-
agement, visualization, collaboration, and predictive capabilities. Achieving
digitalization does not mean that a company has everything in digital form,
but rather that it is capable of capturing and analyzing data and then using it
for decision making.
The fourth trend is sustainable innovation, which is realized through the
virtual environment. Virtuality impacts company competitiveness and profit-
ability, resulting in transformation of the value proposition and the business
model. CIMdata noted some of the virtual engineering practices in businesses.
These include system modeling and simulation (SMS), BigData, digital twins,
IoT (Internet of Things), IIoT (Industrial Internet of Things), and more. The
increased use of advanced technologies has accelerated these trends, and industry
must work constantly to keep pace.
These trends are driving the need for further research on each of these tech-
nologies to improve their implementation and better understand their impact.
Real-time simulation is already being used by some companies, but not all its
benefits have been fully employed throughout the whole value chain. Indeed,
real-time simulation is mostly found as part of product development and not
used in other value-creating activities. This chapter therefore focuses on real-
time simulation and its potential benefits.
14.3 Real-time simulation models and How they Create

Value for Customers
A complete real-time simulation model integrates the appropriate elements;
including the models of environment, mechanics, control system, and user
input; and predicts their interaction to simulate the dynamics of an entire
system (Mevea, 2018b). The user’s main role is to provide input signals via the
control console to direct the control system. The control system is where most
of the input/output data is processed and synchronized with other subsystems.
Actuators produce the forces needed to drive the mechanical subsystem.
For example, hydraulic actuators output the required forces to the mech-
anical system, which responds by moving within its motion constraints.
Multibody system dynamics is the basis of the mechanical subsystem modeling,
and it includes the description, e.g., of the bodies, joints, contacts, and tires.
In a multibody approach, the set of position coordinates can be defined using
generalized global or relative coordinates (Jalon and Eduardo, 2012). A selected
set of coordinates is also used to define the velocities and accelerations of the
system bodies.
To express the equations of motion, the dynamic equilibrium of the system
must be defined. This equilibrium can be determined using an approach
such as the principle of Virtual Work. A multibody system is a constrained
system, so the constraints must be considered when defining the equations
of motion. There are several ways to express them including coordinate
partitioning, the penalty method, the augmented Lagrangian method (Bayo
and Ledesma, 1996), the collision response model (Korkealaakso et al., 2007),
and the lumped LuGre friction model (Astrom and Canudas-De-Wit, 2008).
Furthermore, the hydraulic system model that describes the actuators is often
based on lumped fluid theory, where the hydraulic circuit is divided into
discrete volumes with the assumption that the pressure is distributed equally
(Watton, 1989).
Simulation tools such as these have helped decrease cost and improve simu-
lation capabilities making it possible to model and predict real-world behaviors.
As a result, the capabilities of real-time simulation and its ability to solve real-
world problems have improved. In addition to the reduction in modeling cost,
the new techniques have been made more available and accessible to a larger
number of users for multiple applications (Bélanger et al., 2010). The import-
ance of properly understanding the needs and wants of customers during the
product design process, and therefore involving customers in the actual process
through a virtual prototyping experience with real-time simulation tools, has
driven the need for improved real-time simulation.
In real-
time simulation, the time required to perform computational
functions and accurately compute equations must be synchronized and must be
faster than the simulation time-step for the simulation to acceptably represent
its physical counterpart with equivalent performance (cf., Bélanger et al.,
2010). For each time-step, the simulator takes the following actions (Bélanger
et al., 2010):
1. Reading inputs and generating outputs,

2. Solving model equations,
3. Exchanging results with other simulation crossing, and
4. Waiting for the start of the next step.
As implied in the previous steps, all output data can be exchanged and shared.
This capability enables a new form of communication between stakeholders,
which could include current or potential customers, other dealers involved in
the sales action such as sub-retailers and wholesalers, partners and investors, or
any other party that makes use of the simulator-gathered real-time data.
Traditionally, product and service development decisions are made, for
the most part, by the few experts tasked with directly addressing develop-
ment issues and questions (Mohr et al., 2010. A certain approach could even
be paternalistic. For example, see Baden-Fuller and Haefliger, 2013). In this
approach, customer needs and wants are often solicited via verbal or written
interviews. For a completely new product, this approach is problematic, because
describing a concept-level product to customers is difficult, and it is equally
difficult for customers to fully understand a new product’s potential advantages
or disadvantages. Furthermore, if the product is the result of radical innovation,
customers may not even be able to articulate what their specific needs might
be (Mohr et al., 2010).
This problem can be alleviated by developing real-time simulation-driven
processes, which can be accomplished, in practice, by developing a toolset that
gives multiple stakeholders access to machine research and development, pro-
duction planning, and customer services via virtual worksites that can provide
fully configurable, real-time, virtual prototyping. To this end, it is critical to
employ server-based virtual environments (Figure 14.1). With a server-based
virtual environment, any number of stakeholders can simultaneously work
with the virtual machine. The environment also makes it possible to set up and
modify included models. All in all, these processes can function as tools for open
innovation and crowdsourcing (Füller et al. 2013).
14.4 Business model canvas as a tool to analyze the

value chain
As mentioned in the preceding paragraphs, it is challenging for upper and
middle management to understand the new and emerging needs of their
businesses and adjust to them by innovating and updating their business models.
However, so the added value produced reaches customer, it is of great import-
ance to innovate and update business models to ensure they can fully benefit
from the new technologies introduced to industry.
Studying the benefits of real-time simulation helps companies to better cap-
ture its full potential value and use it more extensively. With this use comes the
need to adjust the business model to provide customers and other players in the
value chain technological value. This can be done by considering and applying
real-time simulation to different actions along the value chain. However, to
identify exactly where this technology best functions, the business model canvas
must be clarified.
As Osterwalder and Pigneur (2010) described,“The business model describes
the rationale of how an organization creates, delivers, and captures value”. His
idea also identified nine building blocks that comprise the business model
canvas. These include the following.
• Value proposition represents what the company is offering and makes

customers consider buying. It shows the bundle of services and products
that create value.
• Channels are the way the company intends to reach its customers and
deliver its products or services by different means of communication, dis-
tribution, and sales.
• Customer relationships comprise the connections that a company
establishes with each of its customers. These relationships could be
automated or personalized to build a customer base, retrieve customers, or
increase sales.
• Customer segments are the various market segments for which the organ-
ization is creating value, that is, its’ most important customers. The com-
pany can serve one or more customer segments.
• Revenue streams are how the company makes money. Here, managers must
determine what exactly customers value and what they are willing to pay
for it.
newgenrtpdf
Figure 14.1 Virtual environment (Mevea, 2018a, 2018b, 2018c).
Courtesy of Mevea.
• Key resources are the most important assets held and owned by the company,
rented from partners, or rented to other companies.These assets are important
to offering value to customers, building relationships, and gaining revenue.
• Key activities serve as the most important activities for the company to
deliver value, maintain customer relationships, and make revenue. They
vary depending on the type of business model.
• Key partnerships constitute the partnership network of suppliers and part-
ners. These partnerships take the shape of cooperation, joint ventures,
alliances, and buyer– supplier relationships. The partnership network is
especially important, because it results in and optimizes economies of scale,
reducing the risk of uncertainty and granting the privilege of acquiring a
particular resource or activity the company needs.
• Cost structure is understanding what the company must pay to create and
deliver the value proposition. Cost structure has an effect over different
blocks in the business model including value proposition, revenue streams,
and long-term customer relationships.
This business model canvas has challenged previous assumptions that there is
one coherent and understandable business model. It has made it easier for com-
panies to follow these steps and compare themselves to other company models
(Osterwalder and Euchner, 2019).
Innovating business models seems to be a method for companies to com-
mercialize innovative ideas and technologies. However, business model innov-
ation also complements process, product, and organizational innovation, which
promotes more collaboration.
Chesbrough and Rosenbloom (2000) stressed the importance of having a
proper business model that works with a company’s new technology to create
value and manage, not only technological uncertainties, but also economic
and market uncertainties. They also explained that learning and searching
for effective business models makes successfully adopting technology more
likely. This search ensures that market needs are discovered and that customers
receive best value. Zott et al. (2011) concluded that the business model plays
an important role in unlocking the potential values of using technologies and
converting them to potential outcomes. Companies can benefit from modi-
fying their own business models to use real-time simulation. This way, they can
remain competitive and offer value to their customers.
14.5 Applying real-time simulation to different alue

chain activities
14.5.1 Applying real-time simulators in R&D and product development

Real-time simulation is being applied in many areas including traffic control,
movies, gamification, and HVAC (heating, ventilation, and air-conditioning)
systems (Pell et al., 2016; Jaiswal et al., 2018; Trcka and Hensen, 2010).
Companies are therefore becoming more aware of the advantages of using
simulation to improve their businesses. More companies, such as Siemens and
other German machine tool vendors, are developing simulation procedures
that use data collected from machinery (Rubmann et al., 2015). According to
Rubmann, this has enabled operators to virtually test and optimize machine
settings for new products before real-world introduction, thereby improving
production quality and reducing setup times for the real machining processes
by as much as 80%.
Product development is essential because it can influence an organization’s
competitive success, adaptation, and renewal (Brown and Eisenhardt, 1995).
The vast amount of literature focusing on product development has described
numerous reasons for successful new product introductions, as well as reasons for
failure. A few of these reasons are addressed here. Ancona and Caldwell (1992)
discovered that the most successful product development teams employed a
wide-ranging external communication strategy, combining so-called ambas-
sador and task coordination behaviors, that helped them secure resources, gain
task-related information, and enhance product development performance. This
type of communication connects product development to various stakeholders.
There is an analogy between Ancona and Caldwell’s (1992) ideas and the use of
real-time simulation in product development.
Von Hippel (1982) showed that a real-time simulation process makes it easier
for a company to make customers an important resource for their product devel-
opment efforts. Djelassi and Decoopman (2013) reported that crowdsourcing
can be helpful in mobilizing selected customers. Crowdsourcing can be defined
as “the act of a company or institution taking a job traditionally performed by
employees and outsourcing it to an undefined, generally large group of people
in the form of an open call” (Howe, 2006a, 2006b). Crowdsourcing is a form
of user-driven innovation and value co-creation through which companies can
apply innovation (Hopkins, 2011). Real-time simulation can be used as a plat-
form that fosters crowdsourcing-based outsourcing.
One example of using a “virtual machine” in product development might be
its application in the development of new car models.Taking a simulator-driven
approach would enable the recruitment of a large number of test drivers who
could then test-drive several (virtual) prototypes or beta versions.This approach
combines the classic idea of testing various product versions with customer-
driven innovation. If this virtual machine approach is well executed, test users
can experience virtual driving under assorted conditions and with different
vehicle features over a substantially shortened schedule.
Receiving customer feedback effectively during the early phases of product
development is an important benefit of a simulator-driven process, as it enables
the involvement of a large group of potential users in the development process.
To better involve potential users though, game-like elements can be added to
the testing platform. Indeed, gamification can boost the commitment of test
users and even encourage the participation of yet a larger number of participants
(Hamari et al., 2014).
The R&D real-time simulator approach offers benefits for both the product
development cycle and the product itself. For example, it can result in better
concept design and material savings for the final design, optimized based on
data from a larger pool of potential users than would be available using classic
marketing research methods.
This real-time simulation benefit type could be common in companies that
have a complex and expensive production process (cf., Bélanger et al., 2010;
Jaiswal et al., 2019). Factories that are responsible for developing agricultural
machinery, for instance, invest a lot of effort and resources during the model
development process. A tool that can minimize risk and optimize test machine
settings before building the actual machine would be welcome.
This is how real-time simulation can be utilized during the R&D process.
It has proven to be an effective tool for machinery design, because the simula-
tion model makes it possible to quickly understand how a machine’s dynamic
behaviors are affected by changing design variables. It can replace experi-
mentation and consequently accelerate product development. Mevea (2018b)
discussed that virtual prototyping in real-time simulation achieves significantly
shorter lead times and decreases the cost of prototyping by reducing the need
for numerous physical prototypes. It also tests the individual components of the
product, how it performs in its environment, and how well it carries out the
tasks it was designed for.
Operator experience is also critical when considering the dynamic perform-
ance of a machine. Real-time simulation gives a machine operator the oppor-
tunity to actively engage with a machine in operation, so the training simulator
should feel and behave as realistically as possible.This is only possible if the real-
time simulation model accurately accounts for the multiphysical behaviors of
the mechanical components in response to actuations and correctly represents
contact behaviors in accordance with control algorithm instructions.
14.5.2 Applying real-time simulators in training

Real-time simulation techniques are also being used to develop advanced
operator training simulators. Compared to traditional training methodologies,
simulation-based user training provides a number of advantages. Mevea (2018a)
indicated that simulation could be used to generate training data, as well as to
test solutions that can be used after training in various scenarios. For example,
as operators are being trained, real-time simulation gives them experience in
likely operating environments subject to a variety of adverse environmental
conditions such as wind, rain, or fog. In every case, the simulator can let the
operator experience how the machine “feels”.
Accidents or injuries to personnel or property that might otherwise occur
when an inexperienced operator learns on an actual machine can also be
avoided. Moreover, the simulator can be used to take operators through various
accident scenarios and instruct them on the most appropriate responses. This
application is most beneficial for high-r isk jobs. For example, the Finnair Flight
Academy uses real-life simulation to train its pilots and crew members, who are
responsible for the safety of their passengers (Finnair Flying Academy, 2018).
With this technology, they are able to simulate the physics, the flying process,
the flying system, and the environment. Therefore, training the operators of
hazardous systems with zero possibility of negative consequence is where real-
time simulation is needed the most, because it provides actual experience with
genuine real-time data to prevent accidents.
Further, traditional training processes require real machines that could other-
wise be applied to productive service. Using real-time simulation in the training
process frees up real machinery to carry out its intended purpose. Simulation-
based user training makes it possible to carry out productive revenue-generating
work while simultaneously saving costs and eliminating adverse environmental
impact.
14.5.3 Applying real-time simulators to predict faults

In the extant literature, most real-time simulation-related articles focus on
computational aspects or purposes, such as developing systems and software
algorithms. Little attention is given to problem-solving aspects (De Souza et al.,
2014). Some researchers have even discussed the use of simulation to conduct
real-time tests. De Souza et al. (2014) explained that these tests would help
develop new embedded algorithms and control techniques for dynamic systems
such as motors, industrial processes, automobiles, and aircrafts. On the other
hand, real-time simulation can also be used subsequent to machine introduc-
tion to improve value-chain processes including design, production, and even
aftersales services.
Trcka and Hensen (2010) mentioned that real-time simulation can also be
applied to make production processes more flexible. They were able to prove
that real-time simulation tools can be used during machine operation to pre-
dict and monitor performance and detect and identify abnormalities in system
behavior.
In their studies, real-time simulation enabled the system to predict machine
errors, a benefit in the R&D stage and a way to improve machine operation
in service. For instance, machine faults can be monitored to predict when a
machine might break down. To prevent such an event, maintenance could be
carried out in advance.This preventative maintenance would save time and effort,
and most importantly, enable the machine to continue performing productive
revenue-generating work for longer. The company would not be exposed to
an unforeseen breakdown.This is why companies are moving toward predictive
maintenance based on real-time simulation (cf., CIMdata, 2018).
Mattera et al. (2018) explained how simulation can be used to reduce energy
consumption by predicting faults as well. The simulation in this case would be
used to predict the optimal amount of used energy during different environ-
mental conditions so that any deviation from the optimal case would be noted
to maintain sustainable and environmentally friendly consumption.
14.5.4 Applying real-time simulators in services

Outsourcing is a growing business trend that began with the outsour-
cing of elements of the manufacturing process (Hätönen and Eriksson,
2009). It has continued to include other business functions, such as human
resource management and R&D. Many multinational enterprises, such as PC
manufacturers, outsource all their major technology requirements, implying
that technology is not seen as key to their success or a necessary core com-
petency (Buckley, 2011). More value can be created by other activities such
as building a brand.
The market research agency Research & Markets (2015) actually forecasted
an 8.1% annual growth in R&D outsourcing from 2015 to 2019. Another key
reason for this outsourcing development trend is virtual R&D, which offers
benefits such as cost efficiency and reduces heavy internal R&D investment
risk. However, virtual R&D is also a specialized activity. As a result, there is
room for R&D-and innovation-shrewd companies to provide virtual environ-
ments and simulator-driven processes to their customers.
An R&D company can collaborate with a machine manufacturer and pro-
vide the necessary user data collection and testing. Additionally, it may not be
cost efficient for every company to develop expertise in market research or to
integrate product development processes, because their new product releases
may be infrequent. A company specializing in providing these services could
thus benefit from economies of scale and more-established knowledge bases,
making this business model a tempting option. Real-time simulation methods
could be used for market research as several test users can try virtual models
efficiently.
One example of outsourced R&D is the pharmaceutical testing for Food
and Drug Administration (FDA) approval in India. Due to lower costs and an
abundant educated workforce, many Indian firms have begun to offer ser-
vices to Western pharmaceutical companies (Manavalan and Sinfield, 2017).
Information technology and protocol standardization allow drug testing to be
performed in a way that is more cost-optimized. This has given rise to a multi-
tude of companies that specialize in a particular phase of the drug development
R&D process.
Similarly, by focusing on real-time simulation technologies, companies can
offer outsourcing services in a particular segment, such as heavy vehicles and
machinery, that include events in which customers and users participate in the
development process. From these events, the manufacturer can receive market
data and valuable knowledge regarding potential customers’ preferences.
14.5.5 Applying real-time simulators in sales and marketing

Schneider and Hall (2011) reported that the “biggest problem” in a prob-
lematic new product launch is “lack of preparation”. They suggested that
because companies are often so focused on designing and manufacturing new
products, they do not put enough early effort into marketing. An immediate
and more realistic idea of different value drivers becomes available by introdu-
cing community-based, real-time tools that simulate real-world functionality
for potential customers. Simulation can substitute for real observation and can
provide expansive realistic data. This information on how potential users may
cope with different situations can then help marketeers and salespeople opti-
mize products for their intended customer base.
A product with a catalogue of value-creating features serves as a practical
example of using simulation to enhance marketing and sales. For example, a
car dealer could use a simulator to give potential customers the opportunity to
test the effects of a car’s various available options (e.g., a more effective engine).
The ease with which customers could try out these extras in real-life scenarios
may result in more of them being sold, which results in a better bottom line for
the dealer. Simulations can also provide information about intangible attributes,
such as feel, which are less frequently addressed in customer surveys.This would
also lead to cost savings for the car dealer, who would be able to stock fewer
cars for test drive purposes.
In general, the advantages for marketeers and salespeople can be found in
customer value analysis, user training, and product demonstrations. Real-time
simulation lets more people participate in the testing phase, as well as in fur-
ther phases of the product development lifecycle. This provides information for
various marketing activities and market research. Simulation data can also be
“topped up” with interviews after the simulation itself, where user behavior can
be observed in real time by the marketeer. Furthermore, marketeers may be able
to develop their market information capabilities, i.e., the processes by which
firms can learn about markets and apply this market knowledge along the way
(Vorhies and Morgan, 2005).
14.5.6 The effect of real-time simulation on business models

The aforementioned effects of real-time simulation on the value chain will result
in changes to the overall business model. If real-time simulation is used during
the development process, for example, it affects effort and time, because the
simulation reduces the need for physical prototyping and therefore affects cost
and resource demand.The business model presents a way for the business to cap-
ture value and deliver it to customers. In this way, the business model is similar to
the value chain, which aims at pinpointing the actions that add value to products.
Financial resources are required to begin applying real-time simulation. In
addition, to bring on any new technology, a company must add expertise for
that technology to its workforce. So, to ensure continued competitiveness by
introducing real-time simulation, a company must not only commit financial
resources, but it must upgrade its human resource as well.
The business model would also face some changes regarding key company
activities. When it starts using real-time simulation, more data can be gathered
from operating machines, leading to more possibilities to incorporate activities
that benefit from this data. For example, it becomes possible to provide accurate
aftersales services by predicting faults using real-time data. Another way simu-
lation can affect business activities is providing training services for employees
or customers.
Combining the gains of real-time data, some B2B companies could benefit
from certain partnerships with other firms that provide services with these data,
so real-time simulation provides opportunities to network and cooperate with
other partners, which will improve business processes and subsequently the
value proposition for customers.
The value proposition could be the most affected block of the business
model canvas, because many real-time simulation benefits transfer to the cus-
tomer. One of these benefits is providing the customer the opportunity to give
feedback and participate in developing products and services so that value can
transfer to a wider audience. Predicting faults, training, and maintenance could
be enhanced with real-time simulation, thus building more value to pass on as
part of aftersales services. Real-time simulation makes it possible to track data
throughout the product lifecycle, leading to greater customer benefit.
The ability to share real-time data enabled by real-time simulation can
enhance a company’s relationship with customers as they become more
involved during different processes –from R&D to when the product or ser-
vice is in their hands and being consumed. Being able to track the data through
the product lifecycle may increase customer trust and loyalty to the company
and make them feel safer.2
As a company introduces real-time simulation, the customer base could be
divided into those who favor utilizing such a new innovative technology and
those who do not.This technology could also add new segmentation according
to the demand for the services and benefits presented by real-time simulation.
If the company targets one or more of the previously mentioned segments, the
new technology will generate a new type of customer interested in the benefits
that real-time simulation has to offer before and after the buying action. For
instance, customers may be interested in the data collected from their purchased
machines and may want to use the data for different purposes to achieve their
goals in predicting faults, reducing costs, or optimizing performance.
Company stakeholders could communicate and share real-time data as well.
This will necessitate new and effective communication channels to distribute
information between company headquarters and its dealers. As for physical
channels, simulation could optimize distribution channels to cover as much
area as possible with the right timing and portfolio of products introduced as
needed. If real-time storage and vehicle status data is available, the company
could further optimize its distribution channels, because accurate input data
will help the simulation to model the situation in more detail.
All of these real-time simulation benefits will eventually affect company rev-
enue both directly, by adding more activities and services to the business model
or more value to propositions and optimizing offerings (which could increase
sales), and indirectly by decreasing costs during R&D, marketing, and other
value chain processes.
14.6 Discussion and conclusions

Real-time simulation is a complicated concept for non-specialized managers,
and they must properly understand its functions and applications to correctly
use it throughout the business process model and reap its full benefits.
This chapter presented some of these applications in different value chain
activities such as R&D, product development, and marketing. Notably, advanced
simulation technologies make it possible to describe increasingly complex mech-
anical systems, so the potential benefits and uses of these technologies should
be considered. When the R&D and in-house product development functions
of manufacturing companies are already making use of real-time simulation
techniques, a starting point for many, it may also mean that it is time for them
to proactively consider developing future real-time simulation skills to enhance
their market research and customer interface management competencies.
Real-time simulation clearly offers advantages. Simulations can lead to
higher success rates for new product launches, as well as cost savings. However,
an R&D operation and product development model based on real-time simu-
lation requires manufacturers to upgrade their capabilities. For example, they
must bring on new skills to manage various stakeholders. Required marketing
capabilities may also relate to the product development processes, for instance,
by which firms develop and manage product and service offerings and market
information management (Vorhies and Morgan, 2005).
Marketing and sales can also benefit from virtual environments. In a survey
focusing on the success factors of Israeli high-tech startups; product perceived
utility, comprehensive market knowledge, reliable marketing plans, and the
marketing and R&D relationship were considered to be important (Chorev
and Anderson, 2006). Properly integrating real-time simulation with marketing
and sales activities can lead to improvements for all these factors.
As customers are able to test a product in a virtual environment, they are able
to experience its different utility benefits. At the same time, marketing and sales
personnel are able to learn more about the marketplace, that is, their existing
and potential customers. This learning should lead to more reliable marketing
plans that match targeting, segmentation, and unique selling propositions.
Training as a value-added service may also become more integral in product
offerings, which would increase sales. If this information, stemming both from
simulation and face-to-face interactions with users, can be communicated to
R&D via functioning market information management systems, the added
value from marketing and sales activities can be used to enhance the entire
R&D and product development process. Therefore, the marketing and sales
tactics required for various customer segments must still be considered inde-
pendently, because experience and usage needs may differ segment by segment.
Using real-time simulations for various purposes can also be a challenge
for companies. For example, the large pool of data stemming from simula-
tion users may be difficult to digest. As a result, the outsourcing of simula-
tion activities might be a viable option for many manufacturing firms, which
provides opportunities for other companies to master this part of the product
development process in the value chain. For the R&D firms that may get the
contracts though, there may be a need to upgrade capabilities in relationship
management.
This chapter presented the possible uses of real-time simulation for different
aspects of the value chain, starting from product development and continuing
through customer receipt. Mevea (2018c) discussed the possibility of ana-
lyzing machine usage data with digital twins to gain valuable insights into
product behavior. This enables operators and consulting companies to find
ways to improve machine use. Training as a part of customer service or internal
training could both benefit from simulated scenarios in different environments.
Predicting faults, in the R&D phase or during machine operation, is another
benefit that real-time simulation can provide that saves time and resources.
Aiming to guide managers and increase awareness of this new technology
and how it affects business models, this chapter also mentioned the use of real-
time simulation during the R&D, sales, and marketing phases, as well as for
after-sales service. Ultimately, real-time simulation was found to impact each of
the nine blocks of the business model canvas. Still, changes in business models
may differ depending on the industry and the market. This chapter accordingly
displayed a general idea that can be adjusted to match a company’s situation
at hand.
As for future research, it would be beneficial to further explore the benefits
of the data gathered by real-time simulation, how it may affect machine
learning, and how real-time simulation in the value chain can affect different
business model blocks. Artificial intelligence is being used on a larger scale,
which is encouraging more research on the subject. According to Gartner
(2018), 14.2 billion connected things will be in use in 2019. That total will
reach 25 billion by 2021, producing an immense volume of data. Therefore,
these data are driving the growth of artificial intelligence, leading to the greater
possibility of its use in real-time simulation to teach smart machines that are
capable of learning.
Another possibility for further research would be to specify the effect and
use of real-time simulation in certain industries to explore how it can increase
variety or give stability to the industry employing this technology.
Notes
1 A business ecosystem can be defined as the “organisms of the business world –
including stakeholders, organizations, and countries –involved in exchanges, pro-
duction, business functions, and … … trade through both marketplace competition
and cooperation” (see Hult et al., 2020, p. 44).
2 Brettel et al. (2014) point out that one key obstacle to the establishment of close collaborations
between companies is the absence of trust:This stems from the fact that many managers are not
used to share critical information with other companies.
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15
Sustainable competitive advantage
through the implementation of a
digital twin
Juhani Ukko,Tero Rantala, Mina Nasiri
and Minna Saunila
15.1 Introduction
Digital-twin technology is revolutionizing industry. Everything in the phys-
ical world can be replicated in the digital space using a digital twin (Qi et al.,
2020). Many companies and technical fields already use a digital twin to spot
problems and increase efficiency using sophisticated models that can mirror
almost every facet of a product lifecycle, a process, or a service (Tao et al., 2019;
Qi et al., 2020).
A digital twin refers to precise virtual copies of machines or systems that
include the process of physical- to-
virtual and virtual- to-
physical twinning
(Jones et al., 2020; Qi et al., 2020). The combination of both connections
allows for continuous cycle optimization, because possible physical states are
predicted in the virtual environment and optimized for a specific goal (Jones
et al., 2020). Using physical modeling for the real-time simulation of a vehicle
is one example.
So far, the discussion on digital twins has mainly focused on the physical
modeling of products and production systems, where modeling refers to the
process of representing a physical entity in digital forms that can be processed,
analyzed, and managed by computers (Qi et al., 2020). In addition to physical
modeling, Qi et al. (2020) present that together with AI and machine learning,
a digital twin can be used for simulation, monitoring, diagnostics, prognostics
and optimization, as well as for the training of users, operators, maintainers,
and service providers. Vijayakumar (2020) showed that a digital twin could
be effective, for example, in predicting customer needs and sales or in man-
aging a supply chain. It seems that digital twins in all forms can provide com-
prehensive support for decision-making covering a wide range of company
operations. However, Qi et al. (2020) argue that implementing a digital twin
is a complex and lengthy process that needs multiple technologies and tools
to work together. They go on to say that many companies and researchers
remain unfamiliar with the key technologies and tools of digital-twin tech-
nology, mainly because of this complexity and the difficultly in integrating the
requisite engineering disciplines.
Sustainable competitive advantage 197
Based on the notions above, digital twins can be utilized across a wide range
of corporate operations. However, implementing a digital twin can be a major
investment, and companies must know which operations to focus on in the
long run and what type of competencies are needed to succeed in the imple-
mentation and use of a digital twin. For example, Jones et al. (2020) state that
given the potential costs and challenges for the infrastructure and workflow
changes needed to effectively implement digital twins in an industrial context,
the lack of a clear understanding of the scale and nature of the benefits that will
be gained remains a substantial obstacle. They continue by saying there are very
few examples of validation and quantification of any perceived benefits against
existing processes and systems with very few papers demonstrating tangible
improvements over current norms. Jones et al. (2020) also expressed concern
that without substantial effort to describe and quantify benefits, it is difficult
to claim that the digital twin concept is the most appropriate solution to the
challenges faced by any given industry. Therefore, it is worth first exploring
and then justifying what possible strategic directions a company must face. It
is equally important to study what kind of competencies the chosen strategic
direction demands and what kind of benefits should be expected.
In response to the above-mentioned research gap, this chapter contributes to
the understanding of how and under what conditions firms implementing digital
twins can build a sustainable competitive advantage. This is achieved through the
construction of a multidimensional model for the implementation of a digital
twin. Furthermore, nine propositions are forwarded and justified to assist in
positioning further research into the consequences of implementing digital twins.
This chapter is structured as follows. First, the model and its theoretical
grounds and descriptions of the key concepts are presented. In the third section
(Section 15.3), the requisite competencies and research propositions are revealed.
Next, conclusions for management research and practice are presented. Finally,
the chapter presents some limitations and further research directions.
15.2 A multidimensional model for the implementation

of a digital twin
15.2.1 Theoretical underpinnings
Understanding how and under what conditions firms facing digital transform-
ation, specifically implementing digital twins, can build a sustainable com-
petitive advantage is an unanswered question. Because implementing a digital
twin requires a clear understanding of the operation and a collaborative estab-
lishment of clear objectives (for example, in terms of promoting continuous
change and introducing new methodologies) new competencies and know-
ledge are needed to stay ahead of competitors. Therefore, the competencies
needed to successfully implement a digital twin can be considered an important
source of sustained competitive advantage.The dynamic-capabilities view offers
198 Juhani Ukko et al.
great potential for studying this type of change in firms. According to Teece
et al. (1997, p. 516), dynamic capabilities are “the firm’s ability to integrate,
build, and reconfigure internal and external competencies to address rapidly
changing environments”. Therefore, the dynamic-capabilities view deals with
the competencies that enable firms to adapt to their operating environment
(Teece et al., 1997).
A dynamic-capabilities view is likely to bring value to the digital transform-
ation study, because functioning in a turbulent operations environment requires
the firm to focus beyond its traditional core competencies. Teece (2014) uses
the term “ordinary capabilities” to refer to the competencies that enable exe-
cuting administrative and operational assignments necessary to keep the firm
in operation. These include accounting and sales, for example, which are easily
replicable and by themselves can no longer sustain competitiveness. To achieve
sustainable competitive advantage, unique capabilities are needed that are hard
to replicate and that govern the rate of change in a firm’s ordinary capabil-
ities (Teece, 2014). These difficult-to-replicate capabilities are referred to as
“dynamic capabilities” that enable a firm to enhance and direct its ordinary
capabilities toward sustained competitive advantage (Teece, 2018). As a result,
a firm’s resources must be developed and coordinated to address digital trans-
formation in the operating environment. Dynamic capabilities, therefore, are
used in the implementation of a digital twin as an appropriate theoretical foun-
dation to reveal the competencies that shape and direct traditional competen-
cies such as product development, marketing, and production.
15.2.2 Defining a digital twin

Along with using the most recent information technologies related to, for
example, the internet of things or different types of cloud technologies for data
management (Jiang et al., 2014; Xu et al., 2014), the implementation of digital
twins is increasing in contemporary operations environments (Tao et al., 2018).
At the general level, a digital twin can be considered a digital replication of, for
example, a product or physical space. A digital twin is not just a 3D-level visual-
ization of the physical product, machine, or factory.Typically, it also includes the
same functionalities as its physical twin. One of the most commonly recognized
definitions of the digital twin was offered by Glaessegen and Stargel (2012).
They contended that a digital twin is an integrated multiphysics, multiscale,
probabilistic simulation of a complex product that closely replicates its geom-
etry and functionality. Tao et al. (2018) have further argued that a digital twin
can be considered an integrated multiphysics and probabilistic demonstration of
a complex physical product that utilizes advanced models and sensors to reflect
its physical twin. According to Glaessegen and Stargel (2012), digital-twin tech-
nology comprises three parts: the physical product, the virtual reflection of that
product, and the connection between physical and virtual life. Further, according
to Tao et al. (2019), a digital twin can be considered a bridge or linkage between
physical and digital worlds. As such, digital twins give companies the ability
to visualize and status their operations from thousands of miles away (Porter
et al., 2015).
Previously, different types of digital twins have usually been used in error
diagnosis, predictive maintenance for factories and machines, and in perform-
ance analysis (Tao et al., 2019). Even though these activities are still important
and valid uses of digital twins, more recent implementations also consider other
important activities. For example, current utilizations include product design
and development and sales and marketing activities. Today, companies are more
frequently using the rich data provided by digital twins to better understand
and operate their connected products (Porter et al., 2015).
15.2.3 Description of the model

This chapter examines the pathways for implementing a digital twin. Digital
twins in product development, production, marketing, sales, and delivery allow
firms to operate sustainably. These physical entities, virtual counterparts, and
the in-between data connections (Jones et al., 2020) enable firms to connect
with products and services (Cenamor et al., 2017) with the aim of building a
sustained competitive advantage.Therefore, the digital twin concept is dynamic
in that a firm’s competencies need to be constantly evolving. In addition, it
may take years before digital transformation results in added value for the firm
(Kohtamäki et al., 2020). The term “sustainability performance” is used here to
describe the comprehensive and long-term effects that digital-twin implemen-
tation can bring. Digital transformation-driven digital-twin implementation
shapes and directs a firm’s competencies, which then results in strategically
directed outcomes and a further sustained competitive advantage. The various
elements of digital-twin implementation is presented in Figure 15.1.These will
be described further in the following paragraphs.
15.2.3.1 Firm competencies

In today’s digital transformation environment, where digitalization has
changed patterns of work and business, it is necessary for firms to be equipped
with different competencies that are compatible with the new ecosystems
(Kohtamäki et al., 2020; Longo et al., 2017). Competencies will integrate know-
ledge and skills to help companies adapt to the new business environment and
build successful businesses (Fowler et al., 2000).
Firm competencies based on strategy and strategic decision-making con-
centrate on the integration of “corporate-wide technologies and production
skills into competencies that empower individual businesses to adapt quickly
to changing opportunities” (Hamel and Prahalad, 1990, p. 81). Therefore, to be
successful in the current dynamic environment, firms must have strategic com-
petencies that work together to apply all actions and operations to reach the
final goal (Matt et al., 2015; Sia et al., 2016). Companies should prioritize their
strategic initiatives to best impact their markets (Kohtamäki et al., 2020).
newgenrtpdf
The implementation of a digital twin
Firm competencies Strategic Sustainability

direction performance
Strategic – the application of all actions
and operations to reach firm goals Product development Economic dimension
(sales, market share, profitability)
Tactical – the utilization of the digital Production
twin in the operating environment Social dimension
Marketing and sales (renewal, productivity, customer
Operational – interaction of the digital satisfaction, social responsibility)
twin within firm actions and operations
Supply chain management
Environmental dimension
Technical – the properties and the (capacity utilization, resource efficiency)
abilities of the digital twin
External environment
Figure 15.1 Model of a digital-twin implementation.

Strategic competencies encompass the results of a firm’s capabilities to dis-
tinctively integrate its resources with strategic business processes (Huikkola and
Kohtamäki, 2017). Access to large amounts of data provides opportunities in
a digital twin, but without a coherent use strategy, these opportunities can
become data-overload problems (Lenka et al., 2017). Therefore, to support stra-
tegic competencies, a strategy is needed to effectively employ digital twinning
in the operating environment (Lenka et al., 2017; Kohtamäki et al., 2020).
Firms operating in digital transformation without tactic or business model fail
to successfully collect, analyze, and exploit the real-time data (Huikkola and
Kohtamäki, 2017).
Additionally, when competing in an ecosystem characterized by swift techno-
logical growth, operational competencies and routines to support both strategic
and tactical competencies are a necessity (Matt et al., 2015; Kohtamäki et al.,
2020; Ukko et al., 2019). According to Matt et al., 2015, the cross-functional
characteristic of digital transformation has obliged firms to be aligned with
other functional and operational strategies (Matt et al., 2015). Therefore, oper-
ational competencies concentrate on the interaction of digital twins within a
company’s actions and operations (Longo et al., 2017). Finally, in addition to
strategic, tactical, operational competencies, firms need technical competencies
to be able to propose effective solutions, which can guarantee the firms position
as a technology leader (Huikkola and Kohtamäki, 2017).
Firms equipped with digital twins are characterized by the seamless integra-
tion of sophisticated manufacturing capabilities with digital infrastructures and
with the ability to capture, produce, and distribute smartness through enhanced
monitoring, analytics, modeling, and simulation (Longo et al., 2017). Therefore,
their technical competencies focus on the properties of the abilities of the
digital twin (Longo et al., 2017; Qi et al., 2020).
15.2.3.2 Strategic direction

Due to the rapid growth of digital technologies in various areas of business
operations, many researchers argue that digitality should be integrated in
the business strategy, and moreover, that digitality should be considered the
main part of the business (El Sawy et al., 2016; Sia et al., 2016; Ukko et al.,
2019). According to Matt et al. (2015) considering digital transformation as a
strategic issue, digital technologies often affect large parts of companies and
even go beyond their borders by impacting products, business processes, sales
channels, and supply chains. They go on to say that with digital transform-
ation strategies, the potential benefits of digitization are manifold and include
increases in sales or productivity, innovations in value creation, and novel
forms of interaction with customers. Consequently, the connection of digital
twins to the strategy can be seen as equally important, at least in regard to the
presented benefits.
For example, Jones et al. (2020) present many potential and perceived benefits
that have been highlighted in literature and industry relating to the digital twin
concept such as:
• reducing costs, risk, and complexity, minimizing design and reconfigur-

ation time;
• improving after-sales service, efficiency, maintenance decision making,
security, safety and reliability, manufacturing management, processes
and tools;
• enhancing flexibility and competitiveness of manufacturing system; and
• fostering innovation.
However, to gain a more structured description of the benefits of various

operations, the use of digital twins must be examined through the different
functions of the company.
So far, the strategic directions for and research into digital-twin technology
has been largely concerned with data management and data usage techniques
of physical modeling, simulation, and optimization (Jones et al., 2020). Qi et al.
(2020) state that modeling is arguably the cornerstone of digital twinning, and
that it provides an information representation methodology for product design,
analysis, computer numerical control (CNC) machining, quality inspection, and
production management. As a result, strategic directions with regard to digital-
twin implementation have so far focused on physical modeling and simulating
the company’s internal functions such as product development, production, and
product lifecycle management.
A more novel strategic direction, in addition to using a digital twin for
physical assets, is to apply digital-twin technology to non-physical modeling
such as predicting customer needs (Vijayakumar, 2020).This can be made more
effective by developing the digital twin to track customer behavior dynamically,
logging the products they purchase and recording their level of satisfaction, etc.
Similarly, the digital twin of a supply chain could track transportation, inven-
tory, demand, and the capacity of the physical supply chain to make real-time
decisions on the product (Vijayakumar, 2020). This adoption of a supply chain
digital twin can be considered a balancing act between logistical variations
and customer requirements, enforcing the production of the right products at
the right time, and promoting and achieving higher future revenue and sales
(Vijayakumar, 2020). Therefore, the strategic directions regarding the imple-
mentation of non-physically modeled digital twins can relate to the company’s
external functions such as supply chain management, customer relationship
management, and sales promotion.
15.2.3.3 Sustainability performance

Rapid advancements in technological issues have enhanced organizational per-
formance in the last couple of decades, but at the same time, the advancements
have led to growing expectations for sustainable business operations. With the
emergence of industry 4.0, organizations expand their knowledge to trans-
form their focus from performing economically to further excelling socially
and environmentally. Therefore, organizations should operate in a competi-
tive environment to produce sustainable competitive advantage and pursue the
triple bottom line that results in a proper balance between economic, social, and
environmental dimensions (Gupta et al., 2020).The sustainable performance of a
practice is the integration of economic, social, and environmental performances
in business process operations (Chardine-Baumann & Botta-Genoulaz, 2014).
Economic sustainability performance focuses on the financial business value
including increases in sales, market share, and profitability (Nasiri et al., 2018).
Digital transformation and drastic changes in the business ecosystem bring
about the demand for procedural changes through the emergence of industry
4.0, which leads to business profitability. Economic sustainability performance
supports the development of an ecosystem for financial growth in business pro-
cess operations and promotes opportunities to oblige stakeholder preferences in
terms of social and environmental aspects (Gupta et al., 2020).
Social sustainability performance addresses issues regarding social and personal
needs in the places people live and work. These issues include wellbeing, social
responsibility, renewal, productivity, and customer satisfaction (Nasiri et al.,
2018). Advanced companies who utilize real-time data are struggling to reach
a high level of social performance by engaging moral standards, trust, and free
discussion (Gupta et al., 2020).
Environmental sustainability performance refers to the creation of business
profit while conforming to environmental policies and standards as well as
resource efficiency and capacity. As one of the outstanding tools in industry 4.0,
a digital twin can enhance environmental sustainability performance through
real-
time monitoring to optimize resource consumption and reduce toxic
emission (Nasiri et al., 2018).
15.2.3.4 External environment

A company’s external environment can be defined and understood as the
different types of stable rules, social level standards, and cognitive structures
(Scott, 1995) as well as the environmental aspects such as weather that are
either guiding, favoring, or restricting its businesses and operations. As such, the
external environment of companies comprises different aspects and continuous
changes to which companies must adapt.
To be able to operate in these continuously changing environments, com-
panies are trying to gather and analyze important data from their external
environment. Digital twinning can play an important role while gathering and
analyzing data from external operations and business environments. According
to Tao et al. (2018), digital twin-driven virtual verification can be utilized to
better follow and understand a company’s environment, its materials, and the
physical characteristics of its customers. As such, the utilization of a digital twin
can, for example, be targeted to follow the changes in the prices of raw materials
or how the changes in weather conditions affect operations.
External environment effects can also be estimated and analyzed in product
development via digital twinning. For example, Tao et al. (2018) suggested that
designers could install assembly sensors in the conceptual design phase to pro-
vide various data from the environment to be used in the design process.
15.3 Requisite competencies and research propositions
15.3.1 Linking competencies to the strategic direction of a digital twin

Early phases of product development are sometimes “fuzzy”, because there is
a lack of information about the initial solution and final application of the
product. As a result, companies utilize digital solutions (e.g. a digital twin) to
virtually visualize multiple product solutions and their application. Managers
and the people who engage in decision making should commit to this vir-
tual working environment and consider strategic sustainable initiatives in the
initial product development phase (Hallstedt and Isaksson, 2017). According
to Tao and his colleague (2018), the successful development of a digital twin
for product development necessitates having advanced technical knowledge
and digital technologies for data acquisition and exploitation in every stage of
product lifecycle. Additionally, the exploitation of real-time information is chal-
lenging without also having the ability to manage, process, and analyze the large
amount of data (Tao et al., 2018).
Based on the preceding discussion, the first proposition can be shaped as
follows.
P1: Firms that are strong in the necessary competencies are more successful
implementing a digital twin to improve product development.
One key aspect of leveraging digital twins is the facilitation of production

and manufacturing processes. Digital twins could enable designers to simulate
the entire factory design process with respect to factory layout, equipment con-
figuration, material handling, buffer capacity, etc. (Zhang et al., 2017; Guo et al.,
2019; Qi et al., 2020). This can be achieved by focusing on the development of
a simulation-based approach for plant design and production planning where
modeling and simulation approaches can be applied to develop digital-twin
models of the plant (Zhang et al., 2017; Qi et al., 2020).
However, to successfully deploy digital twinning on such a scale, com-
panies must have the necessary competencies, for example, the management
and operational competencies. Ukko et al. (2019) argue that in addition to
understanding their business, managers must be familiar with existing digital
tools, applications, and solutions. They need to have a clear vision for util-
izing digitality in the company now and in the future and need to build a
management culture that supports the utilization of digitality in the company.
Similarly, operational competencies include proficiency in adopting and
implementing digital tools and solutions and the ability to make use of them
as a natural part of business processes (Peng et al., 2008; Benitez et al., 2018;
Ukko et al., 2019).
Continuing this line of thought, the second proposition is as follows.
implementing a digital twin to improve production.
Through the contemporary possibilities of integrating with mobile internet,

cloud computing, big data, and other recent technologies (Qi et al., 2020),
companies now have the opportunity to adopt and utilize digital twins in their
marketing and sales activities. Currently, digital twins can be found in smart
cities, manufacturing, cargo shipping, and automotive industries (Qi et al.,
2020). Within these industries, the utilization of digital twins can support, for
example, product launches and marketing based on relevant customer data (Tao
et al., 2018). Tao et al. (2018) further argued that as part of company sales
processes, digital twins can make customer preferences and the location distri-
bution of orders available and also support after-sales services.
As the implementation of digital twins in sales and marketing operations
provides companies with new types of possibilities and options, it becomes
necessary to find the most suitable ways to support those operations. Digital
twinning results in an abundance of data from many different sources, but not
all are valuable from the sales/marketing perspective.
As such, a third proposition can be presented.
implementing a digital twin to improve sales and marketing.
Digital twins provide great value beyond the boundaries of individual

firms, but at the same time, their implementation in the supply chain con-
text necessitates high-level competencies. The required competencies are not
purely technological. Firms also must deal with the challenges associated with
interpreting the data and taking action based on the insights gained (Srai et al.,
2019). Specific knowledge regarding the behavior of the physical object (of the
digital twin), such as its quality evolution, is required to optimize the supply
chain from transport to storage and beyond (Defraeye et al., 2019). Liotine
(2020) uses the term digital innovation to describe the linked supply chain
competencies needed to sense the variability in demand and adjust production
capacity to optimize the supply chain in terms of timely deliveries and reason-
able inventories.
A fourth proposition follows based on these considerations.
implementing a digital twin to improve supply chain management.
15.3.2 Linking strategic direction of a digital twin to sustainability

performance
Digital twinning provides many opportunities in every stage of product devel-
opment through advanced computing and by providing novel tools for simu-
lation and data analysis and digitalized data (Qi et al., 2020). Digital-twin
technology in product development makes it possible to estimate performance
early, which results in savings of time and cost (Wagner et al., 2019) and gains
in energy efficiency (Horváthová et al., 2019). Designers believe that the devel-
opment of efficient physical artifacts is more challenging without the compre-
hensive availability of manufacturing knowledge in the early stages of product
development. The digital twin can help via knowledge discovery in the data-
base and the optimization of each process based on prior product data. These
benefits result in sustainable performance (Wagner et al., 2019).
As a result, a fifth proposition can be stated as follows:
P5: The more a digital twin is used to improve product development,

the higher the level of sustainability performance.
It has recently been demonstrated that in production management, digital

twins enable the optimal (re)configuration of on-site resources, equipment,
work-in-progress, and workers through the simulation, verification, and con-
firmation of process planning and production scheduling (Zhang et al., 2018;
Qi et al., 2020). With regard to control and execution, digital twins can be used
to track everything that occurs in the physical world to subsequently perform
operational forecasting, optimize control strategy, and align actual processes
with planning (Sun et al., 2017;Vachálek et al., 2017; Senington et al., 2018; Qi
et al., 2020).
Qi et al. (2020) present that by using twin data such as sensor data, energy
costs, or performance factors, the optimization service tools are triggered to
run hundreds or thousands of what-if simulations to evaluate readiness or
to make necessary adjustments to current system set-points. From a produc-
tion management perspective, this makes possible a controlled and optimized
system designed to achieve various sustainability functionalities such as pro-
viding higher security and safety (social aspect), decreasing energy and material
consumption (environmental aspect), and decreasing costs (economic aspect)
(Chen et al., 2015; Jones et al., 2020; Qi et al., 2020).
Therefore, based on the notions above, a sixth proposition is presented.
P6: Making greater use of a digital twin to improve production results in

a higher level of sustainability performance.
The utilization of digital twins in marketing and sales processes provides

companies possibilities to improve their sustainability. For example, the use of
digital twins, for example, in exhibition marketing and individual sales processes
can help companies to reduce the amount of physical material needed to dem-
onstrate their products and services. In addition, the real-time tracking of logis-
tics (Tao et al., 2018) and warehouse inventories make it possible to minimize
unnecessary product movement.Tao et al. (2018) further present that in the area
of after-sales services, digital twinning can provide maintenance data which
help companies to predict and improve product lifetime and help to minimize
product failures. Qi et al. (2019) further argued that digital twins can be utilized
widely among different industries to optimize product lifecycles and services
making them more sustainable. The utilization of digital twins as a part of sales
and marketing operations, therefore, can help to minimize physical demonstra-
tion and decrease unnecessary people and product logistics, both of which help
companies to operate in a more sustainable manner.
Based on this discussion, a seventh proposition is offered.
P7: Making greater use of a digital twin to improve sales and marketing
results in a higher level of sustainability performance.
Digital twins have several positive implications for the supply chain as well.
According to Marmolejo-Saucedo et al. (2019), digital twins can help supply
chain members to decrease costs. Because the supply chain is more connected
and more real-time information is available, decisions can be made in real
time, and potential flaws can be more rapidly fixed. Defraeye et al. (2019)
have applied a digital twin to predict quality loss in complex-shaped fruits.
They concluded that the digital twin helped to enhance the logistics process
by reducing food losses, thereby making the supply chain more sustainable.
Further, digital twins can provide greater sustainability performance for the
supply chain by reducing inventory, enhancing product/service quality and
environmental compliance, and improving livelihood and resource efficiency
(Srai et al., 2019).
Based on the evidence presented above, the following eighth proposition is
established.
P8: Making greater use of a digital twin to improve supply chain man-
agement results in a higher level of sustainability performance.
15.3.3 External environment as moderator

The concept of a digital twin includes real-time interactions with the external
environment. The external environment constitutes various uncertainties and
constraints that are monitored by sensors and manipulated by actuators that
form the backbone of a digital twin (Tao et al., 2019). Digital twins can assist
companies in responding to environmental changes to maintain optimized pro-
duction in the pressure of everchanging external constraints (Min et al., 2019).
Qi et al. (2019) has characterized these types of behavioral models in terms
of responding mechanisms that assist in coping with changes in the external
environment. These responses to the external environment help these models
to enhance the simulation service performance of a digital twin (Qi et al., 2019).
Based on the research into the external environment facilitating digital-twin
implementation, the following ninth proposition is provided.
P9: The external environment will moderate the relationships among

organizational competencies, the strategic direction of digital twin use,
and sustainability performance.
15.4 Conclusions
This chapter has contributed to the understanding of how and under what
conditions firms implementing digital twins can build a sustainable competitive
advantage. The chapter constructed a multidimensional model capable of man-
aging a digital twin-driven operation based on insights from multiple discip-
lines and a dynamic-capabilities view of the firm. It has highlighted the benefits
the model brings to understanding the interplay between firm competencies,
strategic direction, and sustainability performance in the implementation of a
digital twin. Further, nine propositions are offered related to the requisite com-
petencies and strategic direction of digital-twin implementation. The model
provides a robust theoretical basis for future research into the consequences of
digital-twin implementation. Therefore, this multidimensional view of digital-
twin implementation is important for the following reasons.
First, a focus of digital twin research has been in product and production
development (Vijayakumar, 2020). However, digital transformation in products
or in production alone is inadequate to achieve long-term competitiveness
(Rantala et al., 2019). Therefore, this type of focus on explicit areas of digital-
twin implementation may limit their effectiveness; whereas a wider perspective
on the strategic direction of digital-twin implementation facilitates expanding
its interaction into all areas of the firm to achieve sustainable competitive
advantage. Second, the model will help companies implementing digital-twin
technology to identify and develop organizational conditions and competen-
cies needed to fulfill their strategic objectives. Third, the model establishes clear
connections between firm competencies, strategic direction, and sustainability
performance in the implementation of a digital twin.
The study suggests that firm competencies at different levels affect the stra-
tegic direction of a digital-twin implementation. Strategic direction refers to
using a digital twin to improve product development, production, sales and
marketing, or supply chain management. Further, greater use of a digital twin
makes possible a higher level of sustainability performance. In this regard, the
model identifies technical, operational, tactical, and strategic competencies as
four separate but related competencies that are likely to influence the imple-
mentation of a digital twin and, consequently, sustainability performance.

From the perspective of management, this chapter provides an important
contribution that can increase and support the practical level utilization and
adoption of digital twins for companies. Firstly, the chapter increases the prac-
tical level understanding of the multidimensional nature of digital twins by
providing a comprehensive view of the different possibilities of how and under
which conditions digital twins can be adopted. Further, and more importantly,
this chapter gives practitioners an understanding of how and under which
conditions digital-twin technology can be realized to build a sustainable com-
petitive advantage.
In addition to discussing multiple different uses for digital twins and their
connections, the chapter provides a multidimensional model that can be utilized
to implement a digital twin in practice. The presented model can be utilized
as a practical level tool that provides different implementation pathways. These
different pathways can increase the practical level understanding of the role of
competencies and the strategic directions in implementation of a digital twin.
15.4.3 Limitations and further research directions

Although this chapter provides a comprehensive understanding of the
different possibilities for how and under which conditions digital twins can be
implemented and utilized in companies, some limitations remain concerning
the results of the chapter. The arguments made concerning the interplay
between firm competencies, the strategic direction of digital-twin use, and their
connection to sustainability performance, as well as the presented model for
implementation of a digital twin are mainly theoretical and based on the prior
literature. As such, more empirical evidence to further explore the presented
model is recommended.
While the theoretical nature of the chapter can be considered a limitation,
it also provides important and interesting avenues for further research. This
chapter offers nine propositions that link competencies to the strategic direc-
tion for digital twinning and link strategic direction to sustainability perform-
ance. These propositions provide important and interesting avenues for further
research in the field of implementation and the use of digital twins, either indi-
vidually or in different combinations.
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16
Managing digital-twin
lifecycle –recognition and
handling of business risks
Tero Rantala, Minna Saunila, Juhani Ukko,
Aki Mikkola, Juha Kortelainen and Akhtar Zeb
16.1 Introduction
The utilization of different types of digital twins among industrial organizations
is becoming increasingly common as the possibilities and solutions developed
by service providers continue to grow (Qi et al., 2020; Tao et al., 2019; Tao
et al., 2018). Currently, digital twins are increasingly being adopted and utilized
by different types of manufacturing companies to support, for example, their
daily engineering, production, management, and decision making. The digital
twins provide these companies with a large amount of data from various
processes. For that reason, company leaders from many different industries are
becoming increasingly interested in supporting their operations management
and business activities with effective utilization of lifecycle big data (Zhang
et al., 2017). From the business point of view, optimization of the process of
digital-twin lifecycle management is an increasingly important objective for
companies among different industries to improve their sustainable competitive
advantage.
From the business point of view, the management and handling of risks
arising during different digital-twin lifecycle phases generates new types of
business-related managerial challenges. Because the use of digital twins as a part
of company operations and management is relatively new and because of the
small number of example cases, the long-term functionality of the digital-twin
lifecycle is not well understood. More precisely, less attention has been paid to the
recognition and understanding of managerial and business-related risks during
different phases of the digital twin lifecycle. Because of a growing interest in the
implementation and use of digital twins, the potential for business-related risk
is growing, and there isn’t much real information available to help mitigate this
risk over the long term. Digital twins are being implemented as integral parts
of overall systems, for example in power plants. Because their expected lifecycle
might be decades instead of few years, business-and management-related risks
related to this type of digital twin use cannot be ignored.
This chapter provides insights to help improve the understanding of
risks related to the lifecycle management of digital twins from the business
214 Tero Rantala et al.
perspective. The aim of the chapter is to recognize risks related to different
phases of the digital-twin lifecycle and provide information that will help
businesses to prepare and deal with these risks. In addition to the recognition of
the risks from the current literature related to digital twins, the chapter provides
empirical insights from two large multinational Finnish industrial companies.
These companies represent digital twin users that are planning to develop new
service businesses based on their digital twin implementations. The company
insights were gathered via semi-structured interviews with people representing
different organizational backgrounds and levels.
The rest of the chapter is structured as follows. First, the theoretical back-
ground of the chapter is presented, including the definition of the digital twin
as it is understood here. Next, the chapter gives a theoretical definition for the
digital-twin lifecycle and describes associated risks and challenges related to
the different phases of that lifecycle. The methodology for the empirical part of
the study is then detailed followed by the presentation of results. The chapter
ends with concluding remarks and discussion.
16.2 Theoretical background
16.2.1 Digital twins

The first mentions of the digital-twin concept are from 2011 (Tuegel et al.,
2011). A hypothetical concept of a digital model of an aircraft was introduced
that would be capable of representing its real- world counterpart in an
ultrarealistic manner.This digital twin would include structural and aerodynamic
details as well as operational loads and factors. Although a large amount of com-
putational resources would be needed, the proposed digital model would be
able to compute, in real time, the physical phenomena involved.
Since then, the concept of a digital twin has been under active research and
development and has been defined in many ways. According to Grieves and
Vickers (2017), the concept of having a representative digital model of a real
physical system has a long history, and it has been referred to as a “conceptual
ideal for PLM”, a “mirrored spaces model”, and an “information mirroring
model”. Grieves and Vickers (2017) define the concept as follows: “The digital
twin is a set of virtual information constructs that fully describes a potential or actual
physical manufactured product from the micro atomic level to the macro geometrical level”.
In their definition, the digital-twin concept is further defined as “a digital-
twin prototype” and “a digital twin instance”, the former being a digital
representation of a prototypical physical artefact and the latter representing an
individual instance of a product throughout its lifecycle. Similarly, Hartmann
and Van Der Auweraer (2020) introduced the concept of “executable digital
twin”, which is based on existing simulation models developed during the
product design and development phases. Such digital twins would be built
according to specific applications and would have the required accuracy and
Recognition and handling of business risks 215
performance. Together with their execution engines or simulation tools, these
digital twins could be deployed on the edge (edge computing) or in the cloud.
They could be used by autonomous machines or users with little experience. In
both definitions of a digital twin, the authors are referring to physical products.
The definition of a digital twin can be extended from those referring to
physical products or systems, such as aircrafts, to any kind of system such as
industrial processes (Vachálek et al., 2017) and even non-physical systems such
as operational and organizational processes. This wider interpretation of the
digital-twin concept makes it difficult to categorize what a digital twin is or
what it is not (Rasheed, San, and Kvamsdal, 2020). Nevertheless, the concept
contains three main elements: the target system or product, its digital represen-
tation (the digital twin), and communication and data exchange between the
target system or product and the digital representation.
The level of detail and the form of representation the digital twin has about
the target system depends on the purpose of the digital twin. For example, if the
purpose of the digital twin is to monitor and collect information about the state
and condition of the machine system, it may represent a detailed structure of
the target machine assembly that includes details of the individual components
and their condition and history. On the other hand, if the purpose of a digital
twin is to optimize the operation of the target system, e.g., by minimizing
structural loading and maximizing system performance, details of the dynamics
of the target system are needed by the digital twin together with some opti-
mization capabilities.
16.2.2 Digital twin lifecycle

The lifecycle of a digital twin refers to the existence of the digital twin itself,
i.e., its conception (beginning of life), its use, any possible modifications and
upgrades (middle of life), and retirement (end of life). The evolvement of the
concept of a digital twin builds on top of other concepts relating to digital
models, such as “virtual prototypes” (Wang, 2003) (Madni et al., 2019) and
“cyber- physical systems” (Chen, 2017) (Nazarenko and Camarinha- Matos,
2020). In these concepts, the digital models of the physical systems contain
features that are present in the design and engineering phase of the targets, i.e.,
at the beginning of life of the physical system and the digital twin.
How the lifecycle of a digital twin refers to the lifecycle of the target system
may differ. At the design and development phases of the product (beginning of
life), the digital twin contains most of the information and possibly different
models constructed to help design the product. Digital twin models are designed
in virtual space according to the product operational needs and requirements.
At this stage, the digital twin models may represent a generation of the product
having similar characteristics.
These simulation models are used as digital-twin prototypes in the vir-
tual space for experimentation and the analysis of product behaviors. Once
the product is tested and the simulation results are considered satisfactory, the
product is ready for production and instantiated from the digital twin models
considering the unique requirements of the end-user. The product is then
manufactured considering its potential use and operating conditions. At this
stage, therefore, the digital twin models are modified and instantiated so that
each digital twin corresponds to an instance of the physical product. Information
from the digital twin can be directed back to the virtual space and used in the
design of new generations of the product. This means that a digital twin can
also be used for product lifecycles other than the one it explicitly represents
(Tao et al., 2019).
According to Haag and Anderl (2018), the current computer-aided design,
manufacturing, and engineering models (CAD, CAM and CAE models, respect-
ively, or CAx models) are not designed to be utilized beyond the product devel-
opment phase, which hinders the automatic generation of digital twin models
that can be used during the subsequent product operational phase. There is a
need for development and maintenance of a “digital-twin template” in con-
junction with the product at every phase of the product development pro-
cess. Therefore, as the physical product is instantiated from the product models,
the corresponding digital twin will be readily available from the digital twin
template.
At the product operation and maintenance phase (middle of life), the
digital twin evolves along the product lifecycle and captures all the informa-
tion about its physical counterpart. The digital twin and the physical twin are
linked through data that flows both ways, i.e., from the physical product to the
digital twin (e.g., data about product performance, behavior, state, and con-
figuration) and from the digital twin to the physical product (e.g., predictions
about product’s performance, failure, and life span).
A digital twin is a digital replica of a real product system. In the industrial or
business context, this means that if the target system is a series product, there
will be a series of digital twins, one for each product produced. In a successful
business based on series products, the number of digital twins will increase
over time, and the maintenance required for each will cover the lifecycles of
all the products sold. In addition, when a digital twin is used in an industrial
or business context, the resource aspects must be considered. As a result, the
digital twin should be constructed automatically from the design and engin-
eering data as a side product of the design work. During the operational phase
of the product, the maintenance and possible modifications and upgrades
of the digital twins should also be automated to cover the overall fleet of
digital twins.
A digital twin should bring benefits to both the vendor and owner of the
real asset. A digital twin will help the owner to monitor and optimize the per-
formance of the physical product, and the vendor will be able to better design
the next product generation using the information and knowledge gained
from the digital twin. For a digital twin to accurately represent the actual state
of its counterpart physical twin, timely modifications and upgrades must be
carried out. The digital twin may come from the original vendor, or it may
be provided as a service from a third party. In either case, strong collaboration
among all the participants should continue to appropriately allocate responsi-
bilities, ensure secure access, protect IPR, and receive fair rewards (Cameron
et al., 2018).
At the product disposal phase (end of life), the digital twin may be used for
safe product disposal. Since the digital twin is a digital representation of the
physical product, it contains information about, e.g., product configuration and
materials, which is useful for proper product disposal. Similarly, for a large and
complex system, such as a process plant, a digital twin can help in demolition
planning for the production process lines and structures by providing infor-
mation about the available space around equipment and in the buildings and
possible hazardous structures. The use of up-to-date digital models simplify
planning and reduce the risk of accidents.
16.2.3 Lifecycle risks of digital twins

The digital twin contains all the information about the physical system, the
data linking the real to the virtual, and the information linking the virtual to
the real system throughout the digital-twin lifecycle (Schützer et al., 2019).
From the perspective of doing business with the digital twin, this reciprocal
data flow introduces several potential risks along the entire lifecycle. These
risks have been previously studied from the perspective of data lifecycle
management.
The process of gathering, utilizing, and interpreting data introduces a
number of risks. These include the loss of relevant data during data overloads
(Tao et al., 2019; Ofner et al., 2013) as well as the possibility of duplicating data
or receiving conflicting data from different sources (Tao et al., 2019; Zhang
et al., 2017) and phases of the lifecycle (Tao et al., 2018). There is also a risk
of losing information across the boundaries of business units, departments,
business processes, and systems (Ofner et al., 2013). This information should
be compressed as a small selection of useful information to support decision-
making (Tao et al., 2019).
Tao et al. (2019) have highlighted the necessity of combining data from
different sources such as products, customers, and the operating environment.
The unifying management and storage of the data (Zhang et al., 2017) can
decrease the risk of duplicating data from diversified sources.There is also a risk
that the data collected in distinct phases of the lifecycle may become informa-
tion islands that waste resources and result in data-sharing problems (Tao et al.,
2018). Furthermore, a lack of regulation or standards at the individual, organ-
ization, national, and international levels hinders the implementation of digital
twins (Tao et al., 2018).
Dealing with the technology leads to other risk types. If the technology cannot
sense or completely capture the lifecycle data on time (Zhang et al., 2017), it
is a risk for the business. In situations where there is a need to respond rapidly
to real-life events based on real-time data or to predict a future event based
on historical data (Tao et al., 2019), the lack of reliable technology is a risk.
Also, ensuring efficient retention and destruction of collected data has been
highlighted. According to Tao et al. (2019), improper data storage and transfer in
a digital twin can result in severe mistakes. It is also crucial to assure validity and
security in data transmission (Tao et al., 2019). Finally, human-related risks deal
with a lack of skills in mining and using the information coming from lifecycle
data (Zhang et al., 2017).
As presented above, there are variety of risks related to data lifecycle man-
agement. As the requirements for different phases of digital twin lifecycle differ
(from early stages of systems development to detailed systems design, main-
tenance support, and process data feedback) (Garrido & Sáez, 2019), the same
applies to risks. Therefore, being a novel and prominent form of technology,
the risks related to different phases of the digital-twin lifecycle require further
understanding.

The case study research methodology was used to collect the empirical data
considered in this study. The case study method was chosen, because it is
considered to be an appropriate research method to explore real-life cases under
circumstances where researchers have the opportunity to observe and gather data
in a realistic context (Yin, 2009; Voss et al., 2002). The motivation for selecting
the two case companies under investigation was to keep the number of cases low,
which according to Voss et al. (2002) makes possible deeper observation.
The selected case companies are large multinational Finnish industrial com-
panies that are planning to exploit possibilities provided by modern digital
twinning to develop their service and product offerings. Since both com-
panies are currently and actively exploring the potential of digital twins, these
cases provide interesting and valuable real-life settings to observe possible risks
related to different phases of the digital-twin lifecycle. Table 16.1 summarizes
the interview process that was used for data gathering.
16.4 Results
The results of the interviews indicate that there are currently many open
questions about the business risks associated with the lifecycle stages of digital
twins and their identification. The results of the study also show that new
business models based on digital twins, especially service- business-
related
business models, are a relatively new phenomenon whose potential is still being
identified. Since there is a shortage of existing real-life cases, more evaluation of
and more experience with longer-term business risks is needed.
In the first phase of the digital-twin lifecycle, one of the biggest business
challenges relates to digital twin-related business logic and its design. When
a new service business is designed based on the digital twin, there are costs
Table 16.1 Process of empirical data gathering
Case company Company type Interviews
Company A Large multinational machine Group Vice President, Technology

and solution supplier in Business Line Manager
wood industry Development Manager
- Its customers are companies R&D Manager
operating in the wood
products industry
Company B Manufactures and services Technology Manager
power sources and other Development Manager
equipment in the marine and Product Development Manager
energy markets
- At the marine market
customers comprise both
shipyards and ship owners
associated with launching and developing it that should be recouped over the
digital twin lifecycle. Based on the results from interviews, the business model
related to digital twins that is currently more clearly conceivable and feasible
seems to be based on a fixed monthly fee paid by the end customer, where the
customer is willing to pay for the identified value-added features and elements.
In this case, the business risk arising from the costs of setting up a digital twin
remains with the product/plant supplier. During the lifecycle of the digital
twin, the revenue stream becomes positive after the calculated time span.
Another, alternative model to deal with the digital twin’s business risk is to
outsource the operation of machines, production lines, or entire factories with
profit responsibilities to their supplier. In such a digital-twin-related business
model, the supplier operates the products it supplies using a digital twin, and
the business benefit obtained is based on, for example, cost savings or improved
efficiency. Such a business model is seen as a potential option in the near future,
but at present there are still too many risk factors associated with uncertainties
regarding digital twin accuracy and functionality, so business risk from oper-
ating products or facilities could be handled solely by suppliers.
In the “beginning of life” phase of the digital twin lifecycle; along with the
delivery of new machines, production lines, or entire plants; end customers expect
advanced and sophisticated visualizations of the products to be delivered. Providing
these have gradually become common practice for sales and design operations.
Digital visualizations are becoming increasingly sophisticated and complex with
no additional cost being billed to customers. As a result, advanced visualizations to
support sales and design work may also result in difficulties for the sale of digital
twins at the “beginning of life” stage, because it may be difficult to identify add-
itional features that a customer would be willing to pay for. Therefore, customers
are accustomed to constantly receiving and utilizing more sophisticated digital
visualizations without viewing the practice as a billable service.
In the “middle of life” phase of the digital twin lifecycle, from a business per-
spective, the main percentage of currently recognized risks seems to be related
to the additional costs of the necessary changes, upgrades, and maintenance of
digital twins over time. When designing the digital twin in the first phase of its
lifecycle, it is assumed that the development and change of the operating envir-
onment will be anticipated and considered as accurately and comprehensively
as possible. Nevertheless, changes due to the development of the operating
environment pose business risks. For example, if the operational environment
modeled by the digital twin changes faster or more than expected, the digital
twins may need to face some major upgrades that may take too long to pay back.
Another risk associated with the change and development of the business
environment in the second phase of the digital twin lifecycle is related to the
development of the business model and earnings logic. As the business and
operating environments of industrial companies continue to evolve, so do the
digital twins, which are constantly and more cost-effectively offering new
features and opportunities. This development will also allow business logic to
be updated and diversified during the second phase of the lifecycle, but there is
a risk that such features that will enable additional sales will not be identified or
customers will be reluctant to pay more for them. Customers may assume that
the features enabled by the development are part of the service to be provided
in accordance with a previously agreed pricing principle.
From a business perspective, the second phase of the digital twin lifecycle
also involves the most significant human-related risks and challenges. Based
on the results, it is assumed that artificial intelligence and machine learning
will soon become a growing part of the digital twin operating environment.
In this case, digital twin implementation will partially or completely replace
people in operational and business decision making. Thus, the digital twin will
replace and displace existing skills and simultaneously demand that new skills
be developed to replace them. Such machine learning and artificial intelligence
expertise can be a significant business investment for companies with risks such
as labor availability and price.
One of the major business risks during the second phase of the digital twin
lifecycle is associated with the company replacing existing equipment with
new and different equipment. Digital twins may form factory-level entities in
which all equipment and functions relevant to the operation of the factory are
visualized under the same digital model. It is assumed that during the lifecycle of
a digital twin, not all devices will come from the same equipment supplier. The
introduction of a new supplier may lead to significant changes and additional
costs for the operation of the digital twin. These may include, for example, the
reluctance of the new entrant to share in the costs of maintaining the digital
twin, an unwillingness to share information, or the inadvertent transfer of pro-
prietary information to competitors.
From a business perspective, the “end-of-life” phase of the digital twin cur-
rently appears to be the least considered and recognized. Digital twins are
planned to last a long time. Little attention is currently being paid to the end
of their lifecycle. End-of-life risks include a digital twin reaching the end of
its lifecycle before it has paid for itself or a digital twin reaching the end of
its lifecycle prematurely. The results of the interviews at different stages of the
digital-twin lifecycle are summarized and presented in Table 16.2.
Table 16.2 Business risks related to digital twin lifecycle
Phase of lifecycle Human related risks Process related risks Technology related risks
Beginning of Finding the Identification of Design of long term

life necessary the elements that updating and
human-related the customer is maintenance of
skills in the willing to pay for is digital twin
beginning of life inadequate. Digital twin is designed
Customer expects as a closed system.
certain elements
and visualizations
with no extra
charge.
Business model
and earning
logic –who carries
the risk of the
payback and ROI?
Middle of life AI and Machine Emergence of The computing
learning are competitors infrastructure
replacing on digital twin (computer hardware,
humans. platforms operating system,
Finding the Sales of additional simulation software)
necessary services/ additional may not be accessible
human-related features as or available for the
skills during the functionalities long term, especially
middle of life evolve (customer for digital twins with
may not be willing lifecycles in decades.
to pay for new
services because
they are thought
to be part of the
product features).
Finding the balance
between the
incomes and costs
of operating and
updating of digital
twins
End of life The digital twin does The end of lifecycle
not return the happens in an
investment during unpredicted and
its lifecycle. uncontrolled
manner because of
technology loss.
16.5 Concluding remarks

From a business perspective, in the first phase of the digital twin lifecycle, the
most significant risks currently identified seem to be related to the business
logic and balancing revenue streams and costs over the digital-twin lifecycle.
Even though the identification of human-and process-related risks appears to
be increasing in the second phase of the digital twin lifecycle, the technological
perspective will nevertheless be emphasized in the consideration and identifi-
cation of risks. To summarize the business risks associated with the digital twin
lifecycle, the contemporary identification of risks emphasizes a technological
perspective. First, the risk may realize, if the digital twin is designed as a closed
system that can only be accessed by the service provider. Second, the risk may
materialize, if the entire computing infrastructure (computer hardware, oper-
ating system, simulation software) is not be accessible or available for the long
term. Third, the risk can realize, if the end of lifecycle happens in an unpre-
dicted and uncontrolled manner. This can be, for example, a loss of technology
if a service provider goes bankrupt.
While technology-related business risks are an integral part of the various
stages of the digital-twin lifecycle, human-related risks also pose significant
business risks for companies. For this reason, it would be important in future
research to provide more information and an understanding of the human risks
associated with the different stages of the lifecycle of digital twins and how
companies could better prepare for them. As the results of this study also show
that the identification of business risks related to the “end of life” stage of
the digital-twin lifecycle is less compared to the beginning of the lifecycle,
future research would also be essential to provide more information on and
understanding to better prepare for the “end-of-life” phase risks.
Acknowledgments
The authors would like to thank all the stakeholders participating in the
DIGIBUZZ (Toward Commercial Exploitation of the Digital Twins) project, as
well as Business Finland –the Finnish innovation funding, trade, investment, and
travel promotion organization –for the provided support to write this chapter.
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Index
Note: Page references in italics indicate figures and in bold indicate tables on the
corresponding pages.
agricultural machine: farm tractor model 197–204, 200; requisite competencies

case example 83–86, 84; modeling and research propositions 204–208;
79–81, 80 strategic direction and 201–202;
analytical methods, virtual sensors 94 sustainable performance and 202–203
Artificial Intelligence (AI) 125, 192 cost structure in business model
augmented reality (AR) 147–148, canvas 184
150–151, 153 crowdsourcing 185
customer choice and digitalization 179
Baines, T. S. 15, 122 customer relationships in business model
beginning of life (BOL) 15–16 canvas 182
business model canvas 182–184, 183 customer segments 182
business models, effect of real-time cyber-physical systems (CPS) 91, 151
simulation on 189–191
“bystander” strategy 47 data-based solutions in B2B
markets 53–54
channels 182 data collection 44–45
Chen, D. 42, 52 data-driven modeling: applications of 72,
cluster analysis results 45–46, 46 72–74; concept of 67–72; conclusions
company capabilities: conclusions on on 75; enhanced operation 73;
37–39; digital business strategy and introduction to 65–66; maintenance
29–30; digital business strategy and and service 74; in multibody
real-time activities and 31; digital framework 71–72; neural-networks-
capabilities and 30; digital capabilities based data models and other methods
and real-time activities and 31–32; 70–71; new business opportunities 74;
empirical examination of real-time research and product development
simulation and 33–37, 34–35, 36, 37; 73; supporting sales and purchase 74;
introduction to 28–29; research model system modeling 68–70
33, 33; theoretical framework and “data wisdom” strategy 47
research model 29–33, 33 deep digital-twin solutions 56, 56–57,
competitive advantage, sustainable: 56–57, 59
conclusions on 208–209; external deep neural network (DNN)
environment and 203–204; firm models 68, 70
competencies and 199–201; Delphi method see expected benefits
introduction to 196–197; from simulation modeling
multidimensional model for digital business strategy 29–30; real-time
implementation of digital twin for activities and 31
Index 225
digital capabilities 30; real-time activities expected benefits from simulation
and 31–32 modeling: benefits of using simulation
digitalization 2, 3–5; firm competencies in the long term for the customer and
and 199–201; introduction to 13–14, other stakeholders 139–141; business-
177–178; market effects of 178–180; activity related effects of simulation
real-time simulation models and value 141–142, 141–143; conclusions on
creation 180–182; strategic direction 143–144; expert panel insights
and 201–202 136–143, 137–139, 141–142;
digitalization competitiveness 179 introduction to 132; motives for
digital twins: in business-to-business 133–134; research method and data
markets (see digital twins in business-to- gathering process 134–135, 135–136
business markets); conclusions on 24–25; external environment 203–204; as
in cyber-physical systems (CPS) 91; moderator 207–208
defining 198–199; description of model
199–204, 200; identified industrial faults, applying real-time simulators to
needs for 19–23, 20–22; introduction predict 187
to 13–14; in lean production (see lean finite element method (FEM) 95
production); lifecycle of 215–217; firm competencies 199–201
lifecycle risks of 217–218; linking
sustainability performance to strategic Gallois, P. M. 133, 134
direction of 206–207; multibody gamification: conclusions on 86–87;
definition of 148–149; multidimensional defined 81; design process for
model for implementation of 197–204, parameterization in 79–80, 80;
200; performance measurement and elements of 82, 83; environment
167–168; real-time simulation and modeling 81; farm tractor model
14–17, 16; recognition and handling of 83–86, 84; introduction to 77–79;
business risks and (see risks, recognition marketing opportunity 85–86;
and handling of business); research methods of data extraction for 82–83;
methodology and data collection on modeling an agricultural machine and
17–19, 18; sustainable competitive 79–81, 80; in product development
advantage and (see competitive and R&D 185; product development
advantage, sustainable); theoretical opportunity 85; steps in 81–82
background 214–215; user experience Google Maps 44
and (see user experience) Grieves, M. 15, 17, 123–124, 127–128,
Digital Twins: Changing the Way We 149–150, 214
Engineer Validate, Market, and Operate our
Products 179 haptics 153
digital twins in business-to-business Hess, T. 31, 42
markets: challenges in selling 57–59;
conclusions on 59–61; introduction industrial mobile machines, joint
to 51–52; level of customer and simulation of 107–115; technical-
digital-twin understanding needed business challenges of 108–109
from sales perspective and 55–57, Industry 4.0 177–178
56–57; in manufacturing industry Information Mirroring Model (IM
52–53; research methodology 54, 55; Model) 17
research results 55–59, 56–57; selling Internet of Things (IoT) 1, 122, 124, 149
data-based solutions 53–54; theoretical “in the game” strategy 47
background 52–54 I-SCOOP 179
Donoghue, I. D. M. 16, 123–124,
128, 150 Jaiswal, S. 81, 85, 92
joint simulation modeling: assembling
end of life (EOL) 16, 150 104–107, 105–107; collaboration
environment modeling 81 benefits and issues on the alliance
226 Index
112–115, 113–114; combining offline virtual measurements 96
parameterized models with optimized online virtual measurement 97
model 106–107, 107; conclusions operator experience and product
on 115, 116; developing customer- development 186
oriented B2B products 104–105, 105; optimized model combined with
of industrial mobile machines parameterized model 106–107, 107
107–115, 110, 111, 113–114; outsourcing 188
introduction to 102–103; preparation
of B2B parameterized real-time 105, parameterization: combined with
106; real-time solutions 109–112, 110, optimized model 106–107, 107; design
111; related research on 103–104 process for 79–80, 80; joint simulation
Jones 197, 202 modeling 105, 106; user testing
Jones, D. 14, 17 and 157
performance measurement: advantages
key activities in business model of digital twin and real-time 169–174,
canvas 184 170, 173; digital twins and 167–168;
key resources in business model lean approach and 166–167
canvas 184 product complexity and
K-means clustering method 46 digitalization 179
Kurvinen, E. 87 product development and R&D
184–186; outsourcing 188;
lean production: advantages of digital sustainability performance and 206;
twin and real-time performance sustainable competitive advantage and
measurement for 169–174, 170, 173; 204–205
conclusions on 174–175; context and product lifecycle management (PLM)
background 166–168; introduction to 15–17, 16, 24–25; identified industrial
165–166; performance measurement needs for real-time simulation and
and 166–167; research methodology digital twins in 19–23, 20–22; phases
168–169 of 149–150; user experience and (see
leap controllers 153 user experience)
lifecycle of digital twins 215–217; risks product-service system (PSS) 15–17;
217–218 discussion and conclusions on
light digital-twin solutions 55–56, 56, 128–129, 129; introduction to
56–57, 58 121–122; related research 122–125;
LuGre friction model 180 research methodology 125; research
results 125–127, 126, 128
machine learning (ML) methods
67, 68, 70 Qi, Q. 196, 202, 206–208
Matt, C. 31, 201
Mevea 186, 192 Rantala, T. 53–54, 55, 61
middle of life (MOL) 15–16, 150 real-time simulation: applied to different
Mikkola, A. 134 value chain activities 184–191; applied
mixed reality glasses 153 to predict faults 187; applied to sales
moderate digital-twin solutions 56, 56, and marketing 188–189; applied
56–57, 58–59 to services 188; applied to training
Mont, O. 122–123 186–187; characteristics of 46–47,
multibody system dynamics 71–72, 104; 47–48; cluster analysis results 45–46,
definition of digital twin and 148–149; 46; company capabilities and (See
user experiences in 151–159, 152, company capabilities); conclusions on
156, 158 strategies for 48–49; data collection
in 44–45; digital twins and (see digital
numerical methods, virtual sensors twins); effect on business models
94–96 189–191; empirical examination of
Index 227
5–6, 13–14, 33–37, 34–35, 36, 37, training, applying real-time simulators in
44–47, 46–48; expected benefits from 186–187
(see expected benefits from simulation
modeling); future research directions Ukko, J. 31, 204
on 6, 6–7, 8, 49; identified industrial Unmanned Aerial Systems (UAS) 124
needs for 19–23, 20–22; introduction user experience (UX): co-creating
to 42–43; joint simulation 109–112, product value with 150–151;
110, 111; in lean production (see co-creation of new forklift mast
lean production); limitations of 49; system in virtual space 155–157, 156;
managerial implications 49; reflections conclusions on 159–160; contributing
on sustainable production based on to product value and competitive
3–5; for sustainability 43–44; advantage 150; developing a user-
theoretical implications 48–49; user centered virtual space of a physical
experience and (see user experience); model 151–152, 152; enabled in the
value creation with 180–182 product lifecycle with immersive
revenue streams 182 multibody-based digital-twin approach
risks, recognition and handling of 151–155, 152; end of product life 159;
business: concluding remarks 222; enhancement of measured data
digital twin lifecycle and 215–217; 154–155; immersive methods
introduction to 213–214; lifecycle for generating user input 153;
risks of digital twins and 217–218; industrial case study 155–159, 156,
research methodology 218; research 158; introduction to 147–148;
results 218–221, 219, 221; theoretical manufacturing of the physical product
background 214–218 153–154; product life management
data 154; real-time communication
Sääksvuori, A. 125, 128 between the physical and virtual
sales and marketing: applying real-time spaces of the digital twin 154; related
simulators in 188–189; sustainability research 148–151; simulator or motion
performance and 207; sustainable feedback platform 153; user-related
competitive advantage and 204 product services in the operation phase
Smart Connected Product System 158–159; user selection of component
(SCPS): discussion and conclusions design data 152; user testing of
on 128–129, 129; related research parameterized model in different
123–124; research methodology 125; environments 157, 158; utilizing user-
research results 125–127, 126, 128 based multibody model in production
Stark, J. 14, 16, 128 157–158;VR, AR, mixed reality glasses,
supply chain management 205, leap controllers and haptics 153
207
sustainability performance 202–203; value chain processes: applying real-time
linking strategic direction of a digital simulation to different 184–191; business
twin to 206–207 model canvas as tool to analyze 182–184,
sustainable innovation and 183; discussion and conclusions on
digitalization 180 191–192
sustainable performance 44 value creation with real-time simulation
sustainable production 3–5; real-time models 180–182
simulation for 43–44 value proposition 182
system modeling 68–70 virtual machine 185
virtual measurements 96–97
Tao, F. 17, 149, 168, 198, 203–205, 207, virtual models see digital twins
217–218 virtual prototypes 215–216
technical methods enabling virtual virtual reality (VR) 147–148, 151, 153
sensing 93–94 virtual sensors: analytical methods 94;
Terzi, S. 16, 150 business opportunities introduced
228 Index
by 97–98; conclusions on 98–100; 96–97; as part of product offering
context and background of 91–93; 93–98; technical methods
introduction to 90–91; numerical enabling 93–94
methods 94–96; opportunities/benefits
and challenges of virtual measurements Yin, R. K. 17, 54

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Real-​time Simulation for

This book provides a comprehensive overview of potential opportunities and the

Juhani Ukko is a senior researcher at LUT University, School of Engineering Science,

Minna Saunila is a senior researcher at LUT University, School of Engineering

Janne Heikkinen works as a post-​ doctoral researcher in Laboratory of Machine

R. Scott Semken is a senior researcher at the LUT University School of Energy

Aki Mikkola is working as Professor in the Department of Mechanical Engineering at

Real-​time Simulation for Sustainable Production

For more information about this series, please visit: www.routledge.com/​

List of illustrations  viii

1 Creating value with sustainable production based on

3 Company capabilities and implementing real-​time

4 Real-​time simulation strategies: implications for operational

5 Selling digital twins in business-​to-​business markets  51

7 Gamification and the marketing of agricultural machinery  77

8 Added value from virtual sensors  90

9 The technical-​business aspects of two mid-​sized

11 The expected benefits of utilizing simulation in

12 Integrating the user experience throughout the product

15 Sustainable competitive advantage through the

16 Managing digital-​twin lifecycle –​recognition and handling

Ulf R. Andersson is a professor at Mälardalen University, Sweden, and Adjunct

• What is the meaning of real-​time simulation in contemporary business

The immediately following paragraphs present the potential of real-​ time

1.2 Reflections on sustainable production based on

1.3 Origins of the book

• How can real-​time simulation improve the effectiveness, customer value,

These questions can be answered by encouraging a new way of looking at real-​

1.4 Future research directions

Value New business

Business model Service business

Sustainable Real-time simulation

Perspective Suggestions Possible research questions

Strategic Strategy-​driven How could real-​time simulation and digital

2.2 Real-​time simulation and digital twins over the

2.2.1 Real-​time simulation and digital twins

2.2.2 Product-​service system and product lifecycle management

• Beginning of life (BOL) includes conceptualization, definition, and realiza-

Market R&D Process Marketing Sell Deliver Maintain Installed Base

Product Lifecycle Management (PLM) to enable Product & Service Digitalization

Figure 2.1 Product lifecycle management framework (modified from Donoghue et al.

• Digitalization in business and product processes

Table 2.1 Information of the data collection process

Company Main products and services Interviewees Interview date

Alfa Forestry and material handling 2 10 October 2017

2.4 Results –​identified industrial needs for real-​time

• Needs related to product lifecycle phase one –​Product in Portfolio

Market Process R&D Process Marketing Process

Outside-In Market Requirements Inside-Out Product & Service Marketing

Sell Process Deliver Process

Identifying industrial needs 21

Figure 2.4 Industrial needs for product lifecycle 3 –​Instances in Operation.

3.2 Theoretical framework and research model

3.2.1.2 Digital capabilities

P1. The extent of a company’s real-​time activities is a function of the

3.2.1.4 Digital capabilities and real-​time activities

P2. The extent of a company’s real-​time activities is a function of the

Digital business strategy Digital capabilities

Figure 3.1 Research model: capabilities affecting the contribution of manufacturing

3.2.2 Research model

3.3 Empirical examination of real-​time simulation

3.3.1 Data collection and sample

Themes Items Scale References

Digital business strategy

Real-time Simulation for

Janne Heikkinen works as a post- doctoral researcher in Laboratory of Machine

Real-time Simulation for Sustainable Production

For more information about this series, please visit: www.routledge.com/

List of illustrations viii

3 Company capabilities and implementing real-time

4 Real-time simulation strategies: implications for operational

5 Selling digital twins in business-to-business markets 51

7 Gamification and the marketing of agricultural machinery 77

8 Added value from virtual sensors 90

9 The technical-business aspects of two mid-sized

16 Managing digital-twin lifecycle –recognition and handling

• What is the meaning of real-time simulation in contemporary business

The immediately following paragraphs present the potential of real- time

• How can real-time simulation improve the effectiveness, customer value,

These questions can be answered by encouraging a new way of looking at real-

Strategic Strategy-driven How could real-time simulation and digital

2.2 Real-time simulation and digital twins over the

2.2.1 Real-time simulation and digital twins

2.2.2 Product-service system and product lifecycle management

Figure 2.1 Product lifecycle management framework (modified from Donoghue et al.

Table 2.1 Information of the data collection process

2.4 Results –identified industrial needs for real-time

• Needs related to product lifecycle phase one –Product in Portfolio

Figure 2.4 Industrial needs for product lifecycle 3 –Instances in Operation.

P1. The extent of a company’s real-time activities is a function of the

3.2.1.4 Digital capabilities and real-time activities

P2. The extent of a company’s real-time activities is a function of the

Figure 3.1 Research model: capabilities affecting the contribution of manufacturing

3.3 Empirical examination of real-time simulation

Figure 3.2 Manufacturing emphasis on real-time activities.

Figure 3.3 Level of capabilities in manufacturing companies.

Digital Managerial Non-real time 4.5083 13.798*

4.2 Real-time simulation for sustainability

4.2.1 Characteristics of real-time simulation models

4.3 Empirical examination of real-time simulation strategies

Elements of real-time Mean

4.3.3 Characteristics of the real-time simulation strategies

4.4 Conclusions: sustainable strategies for real-time

5.2.2 Selling data-based solutions in business-to-business markets

5.4.1 Model illustrating the level of customer and digital-twin

6.2 Concept of a data-driven model

6.2.2 Neural-networks-based data models and other methods

6.2.3 Data-driven models in the multibody framework

6.3 Applications of data-driven models

New business opportunies

Potenal uses and benefits

Figure 7.1 A design algorithm to build a parameterized multibody model.