How Corporations Use VR To Effectively Drive Cost Reduction
Virtual reality has had a hyped but rocky start. B2C VR mass adoption has been low and disappointing. In 2016, Scott Galloway was already comparing the fate of VR to 3D printing:“it ain’t mass”! Companies and major players are yet to prove him wrong. Apart from the gaming industry, the B2C VR market is still in search of its kick-ass application.
Industry analysts keep predicting the market will grow up to 122.5 bn dollars by 2025. This relies on a key assumption that applications which add significant enough user value will have emerged by then. This has led most consumer-centric companies struggling to see (or ignoring entirely) how VR can actually add value to their product offering and marketing strategies.
However, there are now strong signs these companies may actually find themselves being the biggest users of the technology to help them drive their operational costs down.
Corporations using VR to improve their operations is nothing new. Since the late nineties, the process industries have been using VR as a way to reduce the human error factors in their supply chains. It now seems, companies are willing to leverage the technology across a much broader spectrum of their value chain. Two strong examples are coming from industry leaders L’Oréal and Lockheed Martin.
Up until 2016 the company was challenged to find new and cost-effective ways to train their hairdresser teams across the globe. In 2015 alone they trained over 2 million hairdressers as part of their Matrix salon training program. This resulted in expensive training trips for stylists and a heavy reliance on two-dimensional Youtube videos.
Last year, L’Oréal announced a virtual reality training program for salon stylists, developed with 8i and hair care brand Matrix. L’Oréal is now utilizing 8i’s technology to increase their training efficiency and stylists now have the option to learn new styling techniques in the two photo-realistic 360-degree setting. Within the training video, users can circle around models and the professionals as they work, allowing participants to watch the process or technique being taught from any angle. L’Oréal’s vice president of Innovation and Entrepreneurship, Rachel Weiss, told Fast Company the move comes as they are “faced with the challenge of modernizing the industry,” and she says for L’Oréal “education was the best use case for us.”
L’Oréal’s adoption of VR training makes extensive travel of participants and artists redundant, as everything can be experienced at local training hubs on demand. This has increased operation efficiency by significantly decreasing training turnaround times and travel costs.
Lockheed Martin, was battling with high engineering costs and slow production times. In order to design new engine systems, production time was sub-optimal as engineers had to build and test a physical prototype in order to complete thorough design reviews.
The company now uses 3D imaging and VR in their Collaborative Human Immersive Laboratory (CHIL) to evaluate designs, saving Lockheed Martin around $10 million dollars per year. The technology enables engineers to sort out potential issues faster than if they only had access to computer models. VR technologies have also enabled the company to tackle more complex designs in a shorter amount of time and pick up on engineering mistakes before the product hits the production floor.
After engineers eliminate flaws from their 3D designs, they are sent to the 3D printing lab for prototyping. Prior to their use of 3D printing, Lockheed Martin would commission external manufacturers to create their parts, which led to turnaround process lasting 4-12 weeks. Now, they can create metal spacecraft parts directly in-house in less than a month, decreasing turnaround time by up to 66%.
The adoption of virtual reality technology is effectively driving cost reduction and improving operational efficiency. We believe VR will be adopted by most major consumer companies to improve product development, design innovation and training capabilities in the next decade. L’Oréal and Lockheed Martin aren’t the only examples, among others, Ford, Walmart, Audi, and VW are heavily investing the technology and we can’t wait to see more of these successful case studies.