According to global management consulting firm Bain & Company, long-term prospects for the industrial Internet of Things remain ambitious. However, many executives are resetting timeline expectations for reaching scale due to early adoption struggles. Notably, certain “darlings of IoT” like predictive maintenance have not lived up to the hype. And while Bain’s survey of 600 industrial customers shows increasing traction with ‘workhorse’ scenarios like remote monitoring and asset tracking, it exposes areas where many teams and vendors are struggling to deliver the goods. In the end, an iterative strategy focused on specific business outcomes remains critical.
Notably, Bain’s survey finds increasing concerns around integration with existing enterprise systems and data portability. Executives worry their visions for digital transformation will be restricted by internal skill gaps and proprietary vendor services. Understandably, they fear losing control of any data not managed by their own enterprise IT departments. Despite this, confidence remains high that an estimated 20 billion devices will be successfully connected by 2020.
Many executives feel the value proposition for industrial IoT is still emerging. For them, the ability to capitalize on this value and achieve better business results remains elusive. To address these challenges, Bain calls for organizations to build a new operating model and position themselves for long-term success in a connected world.
Recommendations for accelerating IoT adoption in the enterprise
First, Bain recommends industrial organizations choose specific, high-value use cases to tackle upfront. Prove out your ability to address security and other valid IT concerns. Then, adopt an iterative approach for demonstrating ROI and ease of enterprise integration.
Second, use experienced partners to address your gaps. Don’t try building everything yourself. Differentiation comes from the combination of acquired data with your industry-specific domain knowledge. We’ve seen manufacturing digital transformation initiatives stall out when internal engineering teams try to build their own IoT infrastructure. Software for collecting data (and system integration services) can be bought. Build your value, not your tools.
Third, don’t expect overnight success. You’re building up organizational capabilities and working with a new set of specialized partners. Commit to a realistic investment timeline and prepare for change. You’ll likely need to bring in new, more entrepreneurial talent to drive your connected business model. At a minimum, empower your existing teams to think differently. Remember, you’re not rolling out a new CRM application. You’re transforming your enterprise. Act accordingly.
Fourth, industrial IoT revenue starts at the top. Executives must ensure the entire organization is aligned for transition to the new operating model. This requires both vision and clear communication. Unsurprisingly, those responsible for existing products and revenue streams fear cannibalization. Furthermore, IoT initiatives take time to meet traditional P&L requirements. If executives don’t create an environment where the new operating model can take root, prevailing forces will prevent its maturation while competitors move ahead.
Prepare to scale the business
Eventually companies reach the point on their digital transformation journey where they’ve proven out their connected product technology and business concepts. Now what? Bain concludes with a method for assessing readiness to scale up your industrial IoT efforts.
To begin, how well do you understand the full potential of industrial IoT to your enterprise? IoT can dramatically impact the quality of manufactured products, service offerings, maintenance procedures, and other areas of your enterprise. But what will this cost, and what will revenue look like once the system is deployed to production and fully commercialized?
Never forget, your competitors aren’t standing still. You can be sure they’re working on their own industrial IoT initiatives. What is your plan to win in this new arena?
Additionally, scaling IoT requires incentives alignment and coordinated execution across the enterprise. Engineering, IT, service, sales, and business teams must work together for organizations to realize the benefits of digital transformation. Make sure everyone understands their part and is rowing in the same direction.
Bain summarizes their last recommendation with a sentiment that we refer to as “strategy over software.” By strategy, we mean not just a plan, but a comprehensive roadmap, organization structure, and business model across the enterprise to support the success of your industrial IoT initiative.
Digital transformation is a journey
As you start your journey, you’re going to need an industrial IoT platform. Whether it makes sense to build your own or buy one depends on a variety of factors. But digital transformation isn’t just about technology. As Bain notes repeatedly, it’s about so much more. Business models and sales strategies, along with clear user stories, team roles, and responsibilities are equally critical to successful IoT initiatives. Beyond a platform, an experienced digital transformation partner can accelerate planning, implementation, and successful commercialization of your connected systems.
The internet of things (IoT) is much more than the next step in consumer technologies — it also represents a significant leap forward for industries of all kinds.
Manufacturing is already — and will continue to be — a field almost uniquely suited to applying IoT technology. In fact, there's almost no part of the process that won't be touched in some way by this ever-expanding web of smart and interconnected sensors, computers and machines. No matter how large or small your operation is, it's increasingly difficult to understate the potential value of adding intelligence and oversight to your processes using the internet of things.
Here are four ways IoT is revolutionizing the field of manufacturing.
A Greater Degree of Competitiveness
According to a report published by Verizon in 2016, an overwhelming majority of manufacturing managers already consider IoT technology a critical competitive advantage. It's hard to believe that such a sea change happened practically overnight, but not quite so much when you realize what's at stake.
Suffice it to say, the IoT represents a bundle of industrial innovations that have been a long time coming. Most of the competitive advantages cited by the Verizon report have to do with parts of the manufacturing and business processes that required guesswork or drew from incomplete data sets. We're talking things like altering business processes based on current demand and future trends, optimizing longstanding workflows and responding to unforeseen events.
Technology powered by the IoT can make manufacturing companies more competitive by, among other things, granting some autonomy and automation to back-end processes that inform the rest of your employee processes and workflows. This type of automation could, for example, automatically flag product for shipment to another location based on current levels or even trip a slowdown on one production line to pivot to another product if future demand isn't expected to be there.
The result is a leaner business that can run circles around your more flat-footed competition, who might've been slow to adopt modern technologies.
A Demystified Supply Chain
Gathering useful insights into the supply chain — that all-important web of manufacturers, shippers and vendors that makes modern production and order fulfillment possible — has been one of the most significant advantages of applying the IoT.
Of course, oversight into vendor and shipper processes is nothing new — but accessing it and making decisions in real-time is a relatively new innovation courtesy of the IoT. These days, every plant location and every party responsible for assembling or moving finished or in-progress merchandise enjoys a higher degree of transparency and collaboration thanks to remote monitoring technology, sensors along material handling paths and assembly lines, and more.
Perhaps most importantly, the availability of granular data at each stage lets each party know exactly what inventory levels look like, all the way up and down the supply chain. This is a significant innovation and a huge stride toward true lean and just-in-time manufacturing, not to mention seamless collaboration. Neither wasteful production methods nor products sitting idle that are needed elsewhere are long for this world, and it's all thanks to the IoT.
Automated Maintenance and Unsafe Operation Alerts
Even the very machines manufacturers use to fabricate and assemble new products are getting smarter thanks to the internet of things. Low-cost sensors are easier than ever for facilities to deploy on their critical machines and equipment, which can make the time and labor associated with ongoing maintenance far easier to manage.
Sensors on manufacturing and product handling equipment provide real-time alerts and analysis concerning the condition of the machine and its many moving parts. These sensors can also take the guesswork and scheduling out of regular equipment maintenance by sending an alert to the appropriate parties at regular intervals — or whenever the machine's onboard self-diagnostic tools detect an impending failure or fault.
The implications for manufacturing are enormous since no two organizations work under the same conditions and with the same equipment. IoT-powered condition-based alerts help facilities maintain the health of their machines, no matter where in the world they're located and no matter what the temperature and humidity are doing. Some devices are more finicky than others when it comes to environmental conditions, making no-hassle maintenance a considerable advantage.
Improved Safety Oversight
Before the industrial internet of things, key performance indicators for employee safety and work environment were commonly spread across several systems, including paper-based ones. This made it difficult for plant managers to get a good, top-down sense of where dangerous processes existed or what types of simple process changes might result in improvements.
The internet of things makes it possible to gather data concerning work accidents and near-misses, property damage, employee injury rates by process and more. It's quite common — and potentially even required — for modern business to track some of these data points as for various compliance purposes. However, it's less common to assemble them in one place and use modern digital technologies to draw actionable conclusions, isolate consistent trouble areas and drill down to causes.
Wearables are another safety-minded application of the IoT. Helmets and wristbands are being eyed as possible future locations for health-related sensors to keep track of workers' physical locations, temperatures, heart rates and more — all in service of rotating employees more regularly, keeping bodily stresses to a minimum and bolstering organizational safety as a whole.
Tomorrow's Technology Today
It's likely that the future will see even more IoT innovations for manufacturing. For right now, these four major improvement areas represent many opportunities for the modern business to revolutionize what they do and how they do it.
I've seen a lot of different thoughts about "original equipment manufacturers" and "original design manufacturers" recently, so I figured I'd offer my observations from my time working in Shenzhen for my IoT company.
Backstory: we’re partnered with Qualcomm to cloud enable bluetooth mesh technology across myriad US, Asian, and European based companies, primarily for lighting and smart home products in consumer/commercial markets. I spent about 6 months in Shenzhen and Hong Kong during 2017 putting together the supply chain partnerships.
From what I’ve experienced, “brand,” i.e. the companies we’re familiar with as consumers, and Original Equipment Manufacturer “OEM” are used interchangeably, while Original Design Manufacturer “ODM” refers to the “factory.”
In most of my interactions, there is a tight albeit painful relationship between the OEM and ODM in consumer electronics because cooperation between multiple vendors is often required to get a product to market, especially in IoT. Typically, the most differentiated intellectual property (IP) is in the hands of the OEM (brand)— industrial design, software, firmware, and it’s in their best interests to obfuscate as much as possible throughout the supply chain to make it harder to replicate the technology, which everyone assumes will happen. And it does. This is especially true during the rise of the IoT, where connectivity challenges plague both sides of the pond, and clever solutions are the 11th hour superpower everyone is fighting to find first to use as leverage in the supply chain.
There is another class of manufacturers— not sure the technical name, but we call them “module makers” — companies that specialize in the design and production of drop-in PCB modules for various connectivity chipsets to make them easier to productize. An example would be ITON, who provides chips for several of GE’s products to the prime ODM (such as Leedarson or Eastfield) who is responsible for final assembly (note: many ODMs are also module makers— they keep chips in house to maximize control and profits).
Both ODMs and module makers participate in a process of product innovation that presupposes the market. Chipmakers (and other tech vendors) like Qualcomm send their reps out to the factories to demo new silicon technology in the form of a “reference design” in a bid to get the ODM to create a module or product based on that chipset that answers to a trend they’ve noticed from their OEM/brand customers. In this way, the ODM bears the R&D cost as a bet for business, but doing so gives them a chance to retain the right to get a royalty on every module sold. Ask an ODM to hand over any firmware they've made and they’ll tell you with their sweet puppy dog eyes “eat my shorts” because it’s how they keep you from just taking everything to another vendor.
For brands like Home Depot (or more generally companies less interested in designing hardware) these ODMs are essential because they are flexible enough to develop a catalog of partially developed products on speculation— whatever successfully sells up the food chain at Home Depot, they make real (note: the “make real” part is where a lot hits the fan because this stuff is hard to scale).
The OEM-ODM-module maker ecosystem creates a sort of “it takes a village to make a product” atmosphere, but with grumpy uncles, annoying neighbors, and meddling kids abounding. There's a constant sense of quiet espionage on both sides, although that tends to get better if you develop a direct relationship with your mfg partners. Western business has evolved to sustain trust with purely transactional relationships-- this is way less true in places like China. Go to lunch with them and take them to dinner a few times, invite them to Macau, get them drunk and having fun with you. These relationships are insurance policies on getting screwed. Further, having boots on the ground near your manufacturing is practically a requirement nowadays if you want to have any hope of your supply chain operating smoothly.
In the case of a brand like Apple, who meticulously defines and controls every little detail of their product and supply chain works with an Electronic Manufacturing Services company “EMS” like Foxconn who primarily invest only in building other designs precisely to specification.
So OEM v. EMS: OEM: “build this for me, exactly like this, and don’t ask too many questions, or I’ll eat your children.”
The ODM/OEM relationship is a bit shakier:
OEM: “build this for me, and pretty please do your best not to use lead paint or explode my users.”
All that said, many companies I’ve encountered are chimeric— companies that usually do business as an EMS could also be caught as an ODM if the opportunity is right. I’ve wracked my brain over how to approach meetings with ODMs that also have an OEM/brand side to the company. The ODM side is a potential partner while the OEM side is a potential customer— in the already confusing world of IoT this can be quite the rollercoaster.
I could be off, but the cash value of the above has navigated me through hella lots of conversations from ivory tower to where the dog food gets made. It is a truly global and complex web of associations, across cultural, language, political, and social boundaries. Read “Poorly Made in China” and “Barbarians at the Gate” to see the differences in East vs. West strategies for business success, which I see as orthogonal values of Replication and Dominance.
If you’re interested, here’s a great article by a Shenzhen based supply chain expert: https://www.linkedin.com/pulse/3-types-partners-product-managers-can-use-development-changtsong-lin/
Thanks for reading! Our company is expert at IoT integrations, and we thrive on building ecosystems of partners with positive feedback loops on new services and revenue streams. Kindred spririts, please reach out to me at [email protected]
COO @ Droplit
The predicted growth of the IoT market in manufacturing is unprecedented. At the moment, Markets and Markets researchers predict it to reach $13.49 billion by 2020. Just to give you some perspective, in 2015 the value of this market was estimated at $4.11 billion. The main IoT technology applications in manufacturing revolve around enhancing connectivity and automation. The main goal of this tech is to maximize the efficiency of the manufacturing process while minimizing its costs. The benefits of utilizing digital solutions in this industry are a great motivation for the developers as seeing what has already been achieved prompts them to see how far they can push these solutions.
The most important benefits, no doubt responsible for such a tremendous growth of the IoT manufacturing industry, include:
Boost in Work Efficiency
Constant improvement of the manufacturing operation is one of the main goals for any industrial business owner. Implementing IoT technology on any level of the manufacturing allows to:
- Automate the production process, or some of its steps
- Pre-test new ideas and designs (using a combination of advanced modeling and testing solutions)
- Analyze the production process and identify its strengths and weaknesses
- Save time and money for the business by increasing the efficiency of both the production line and employees
- Monitor the manufacturing business performance at all times, analyze the data, and use this information for accurate predictions
Steady Improvements in Performance
The most important benefit of the contemporary IoT solutions is their ability to improve constantly by simply ‘doing their job’. The AI that governs them is usually programmed to process data collected during the manufacturing process and optimizing that process based on it.
As the system is regulated by the AI developed specifically for it, the efficiency and accuracy of these changes and advancements are greater than any settings set by man. However, making manual adjustments is possible and this will add another layer to the machine’s betterment. The intuitive operation systems of today will memorize the most effective patterns in the production process and find a multitude of ways to achieve or even improve those results. They will do this with utmost accuracy and speed. Utilizing these particular solutions can make even a small manufacturing business into a big player on its market.
Creating the Perfect Environment for Innovation
Manufacturing facilities reigned by IoT technology are extremely flexible. This means that the business owner is able to integrate new solutions quickly and boost the production process’ efficiency right away.
Most importantly, implementing this technology allows to step away from the traditional linear production process. This, in turn, leads to the creation of more efficient singular production cycles organized into a cohesive system that can adjust to the change in manufacturing demand immediately. Such a scheme allows for the most efficient use of resources.
This kind of ‘cluster’ manufacturing also enables the owner to monitor the entire system more easily. One can determine where an issue occurs and have other sectors pick up the slack if possible. In any case, this scheme allows making quick and more accurate fixes for any problems.
Allowing for Predictive Maintenance
Predictive maintenance is a very efficient method of cutting the manufacturing costs. It is exactly what the name states, a maintenance based on predictions. It’s a step up from preventative maintenance as it’s more effectively targeted.
Predictive analytics drive this solution and allow you to maximize the equipment output while minimizing the costs for its maintenance. Note that using such technology also helps you save money you would have lost due to the manufacturing process stopping.
The IoT for the manufacturing industry develops extremely fast with dozens of solutions released for any kind of business. Embracing this technology now can not only give one an edge over the competition. With the high popularity rate of this tech, not using any of these solutions is sure to marginalize the business.
Adam Flamberg is a consultant at DO Supply.
The manufacturing industry is undergoing many changes. Those specializing in traditional manufacturing are finding it difficult to keep up with the changes. Perhaps the biggest change has been how traditional manufacturing has come under pressure to manage vast amounts of data captured from different sources. Here are some of the reasons the Internet of Things (IoT) can help.
1. KEEPING AN EYE ON SUPPLIERS
Quality control has become easier because IoT helps keep an eye on suppliers. This makes for easier manufacturing processes. Keeping an eye on suppliers is all about looking at all the constituents that the supplier offers. Capturing data about these constituents through IoT helps make for faster data processing and better quality control.
2. MORE PRODUCTIVITY
Thanks to IoT, many manufacturers are now building self-correcting systems. Missing parts are replaced and parts are replenished, giving rise to greater productivity. Since manufacturing industries are looking in particular for ways to boost productivity, there is no way for them to overlook what IoT can do for them. In addition to greater productivity, there is also more convenience since the need for human labor reduces.
3. MAINTAINING SUPPLY LINES
The Internet of Things is expected to help manufacturers stick to lean manufacturing while at the same time helping maintain supply lines. Since lean manufacturing often requires smart management of the supply lines – to ensure that components are never in short supply but there is no overstock – IoT is expected to help resolve many problems. It will help ensure that suppliers located in different regions can be kept in the loop and supply lines can be managed smoothly so that there is no shortage. It will also help reduce waste and optimize the use of resources.
4. UNINTERRUPTED MANUFACTURING PROCESS
Usually, manufacturing is divided into many processes, from sourcing of raw materials to production, transportation and reaching the customer. However, with the Internet of Things, experts envision something extra. The entire process will be smooth and effective. The raw materials will be already marked for production, intended to reach a particular buyer. This is how experts see things play out as IoT advances to new levels.
5. REDUCED COST
As IoT gains more efficiency, manufacturers can expect to see lowered costs. This is one of the primary reasons manufacturing experts are enthusiastic about the role of IoT. It will become easier to track information about products and processes and more automation would help bring about greater efficiency, thus eventually reducing costs. Lowered costs are expected to boost profit margins. If your manufacturing plant has not invested in IoT yet, this might be the right time to start.
6. LAUNCH NEW PRODUCTS
With IoT, studying needs and launching new products becomes easier. There is less jostle and inefficiency than traditional systems. Manufacturing is thus one of the key areas where you can expect a lot of improvement, thanks to the Internet of Things.
7. INTEGRATING OFFLINE AND ONLINE PROCESSES
Traditionally data and manufacturing have been treated as separate entities. However, in manufacturing industries where IoT advances, this is expected to change. As products begin to carry information about them, it becomes easier to assign a processing and logistics path to them. This is why it becomes critical to involve IoT in your manufacturing plant.
8. CONNECTED TO THE CONSUMER
Products are, in the end, manufactured to suit the consumer. Thanks to IoT, it becomes easier to stay connected to the consumer and create products that match their requirements. This offers two-way benefits, as the consumer gets the best products and the manufacturing plant is able to manufacture products per exact specification. There are a lot of benefits that manufacturers can expect in the long term, thanks to the Internet of Things.As manufacturing processes undergo change, it becomes imperative for manufacturers to make the most of the coming revolution. Supply chains and logistics will become smoother thanks to the industrial Internet of Things. According to many experts, we are at the cusp of another major revolution that will change not only how things are manufactured but also the market economy. It is a good idea to be prepared for these changes by investing in the right IoT system.
This resource is part of a series of specific topics related to the Internet of Things. To keep receiving these articles, sign up on IoT Central.
While discrete manufacturing is used in a diverse range of industries, including automotive, aerospace, defense, construction, industrial machinery, and high tech, all of them face common and tough challenges such as higher resource volatility, more competition, increasing customer expectations, and shorter innovation cycles.
According to a study by a Roland Berger (see chart), product complexity has increased dramatically in the past 15 years. Manufacturers have to cope with two overlapping trends: the variety of products is constantly increasing and has more than doubled in the past 15 years, and, in parallel, product lifecycles have gotten about 25% shorter. These factors are putting an increasing pressure on margins, on supply and procurement systems, and on overall business models. According to Roland Berger, managing this complexity could reduce costs by roughly 3% – and certainly digitization can help improve this margin.
The threats and potentials of digitization
Adapting to the age of hyperconnectivity is a matter of life and death for the majority of companies, according to a study by the Economist Intelligence Unit. More than half of enterprises feel very strong competitive pressure from digital offerings by their traditional competition, established companies using digital to enter their market, and digital startups. Certainly, the competition is not waiting, and neither will today’s well-informed digital customers, who want more choice, better customization, and more information around the buying process. While digitization might add another disruptive dimension to an already rising complexity, discrete manufacturers are seeking the benefits of digitization. They are already proactively exploring the use of the IoT to better connect their supply chains, assets, and products, according to an IDC white paper, The Internet of Things and Digital Transformation: A Tale of Four Industries, sponsored by SAP.
Most manufacturers start with less complex projects, such as enhanced visibility or tracking, and progress to more sophisticated processes that require automated or predictive workflows, according to IDC. The findings of the study suggest that companies should start their IoT projects with the overarching goal of a live business operation already in mind. By combining three IoT use cases for manufacturing, i.e. connecting products, creating a connected shop floor with customization, and extending digital business models (see chart), companies will create a competitive business operation that fully exploits the digital opportunities.
Connecting products to improve innovation
Using IoT for innovation is a highly underestimated potential of digitization. A significant percentage of new products fail, and the associated R&D and marketing costs are lost. Customers already expect their products to come with a certain degree of interactivity and this demand will certainly grow in the future. According some estimates on the adoption of connected technology by consumers, the ratio of connected and interactive products will rise to approximately 20% on average by 2020, according to Forbes. This is a conservative estimate, and in some segments the ratio might increase much faster.
By digitizing current products and launching fully digitized ones, manufacturers can significantly reduce the risk of new product failures, as IoT-based products will enable them to monitor the actual use and performance of their products, get live feedback from their customers, and adopt future product innovation. IDC expects that by 2017, 60% of global manufacturers will use IoT to sense data from connected products and analyze that data to optimize the product portfolios, performance, and manufacturing processes. Similarly, the integration of IT assets and information with operational technology in the plant and the supply chain is also on the roadmap, if not already started.
Connecting the shop floor
Digitization offers the possibility to oversee every step in the manufacturing process, from customer demand, through production, and across the complete supply chain. The IDC study identified two IoT use cases – strategic asset management and customer experience – that seem to be very attractive for discrete manufacturing.
1. Strategic asset management
Manufacturers should start to digitize all of their assets in the production process and use IoT-based preventive and predictive maintenance scenarios in the plant and supply chain to reduce downtime and improve utilization. Using the information generated from digitization and IoT, businesses can evaluate use patterns and maintenance routines of their inventory and assets and optimize operations. Fixed assets can account for as much as one-third of all operating costs, so under today’s cost pressures a digital asset management surely matters. To fully use the potential of IoT and the real-time information gathered from assets, devices, and machines, companies need to ramp up their analytical and decision-making capabilities. Anecdotally, companies report that IoT use cases (such as remote maintenance) changed the way they thought about data and got them thinking significantly differently about information and insights.
2. Customization for customer experience
Demand for more choice, flexibility, and customized products is growing fast and estimated to be 15% of all products by 2020, according to MIT Smart Customization Group. Depending on size, material, and complexity, that percentage might be significantly higher. However complex the challenge for manufacturers might be, connected production in real-time is the basis, and it needs the right data from production capabilities, supply, equipment, and workforce, combined with all customer preferences. Getting the customer into the customization and production process is increasingly important for an improved customer experience, so IoT should be used to connect the products and, with it, the customer. This will not only give companies valuable data about user preferences and ideas for product innovation and improvements, but it will allow them to plan the customization of products much more efficiently.
Digitally enhanced business models
Digitization is by now a synonym for disruption. According to a study by the Economist Intelligence Unit, 60% of companies think that digitization is the biggest risk they face. More than half of companies feel competitive pressure from digital offerings by their traditional competition and digital startups. As IDC found, discrete manufacturers are already actively exploring the IoT opportunities, so the change is already underway.
As we pointed out previously, the customer experience of choosing and buying a product is increasingly important, but it does not stop there. IoT-connected products will get the customer into an ongoing interaction with the product vendor and/or retailer, enhancing the buying and use experience. Moreover, companies can use this connection to expand their business models. In its study, IDC mentions a wider range of ideas that manufacturers already explore, such as remote maintenance, refill and replenishment, contracting, product performance, training, and location-based services. While they may not be applicable for all companies, they show the wide range of possibilities and opportunities. Digitization may be a threat for some traditional business models and companies, but it offers huge potentials for those who focus on the customer experience.
Creating a live business operation
The huge potential that IoT offers is less the physical connection of things, machines, and devices, and more the opportunity to create a live business operation based on an advanced data strategy and analytics. While all aspects of IoT have large innovation opportunities on their own, the combination of connected products, customization, and digitally expanded business models promises the biggest benefits for discrete manufacturers. Thus any IoT strategy – wherever it starts – should be created with a larger digitization goal in mind.
- Connecting products and strategic asset management has big potentials for discrete industries.
- The combination of connected products, customization, and digitally expanded business models promises the biggest benefits.
- Companies should create a live business operation with advanced data and analytical skills to use the full potential of IoT.
For more details and information, please read IDC’s IoT whitepaper IoT and Digital Transformation: A Tale of Four Industries and look for future IoT papers that delve deeper into the IDC study’s findings.
In a relatively short time, The Internet of Things (IoT) has grown from a niche technology in the global market, into a widely embraced phenomenon. Rapid advancements in IP technologies, as well as the IoT devices and industries that they’re used in, mean that devices are now able to be integrated in more ways than ever before. One particular sector that has strongly embraced IoT adoption, is the manufacturing industry.
Offering a range of benefits, IoT will be a major force in shaping manufacturing throughout 2016 and beyond.
Manufacturers Will Become Increasingly Software Centric
Manufacturing hardware, processes, and even operational processes, will become more reliant on software. Whether referring to the embedded apps and software within devices, or the server-side software that controls machines and automations, manufacturers that adopt IoT as part of their strategy will need to focus investment and knowledge building around software. Not only will this affect the depth and complexity of their IoT integration, but it will also mean that these manufacturers will need to procure new talent or upskill existing staff with specific IoT skillsets in IT.
Costs will Decrease, Increasing Adoption
Cost has been a significant factor for manufacturers who have been hesitant to adopt widespread IoT systems in manufacturing. As IoT technologies continue to mature, implementation costs will decrease. Because IoT provides significant benefits in operational efficiency, price shrinkages will influence manufacturers who were previously undecided on the financial benefits of IoT.
RFID Will Be a Major Technology in Manufacturing
Research firm Markets and Markets, has projected that RFID will be widely adopted in the manufacturing sector. There are a number of factors contributing to this, including the ability to use passive RFID chips in manufacturing, with little additional cost. NFC is expected to experience the highest level of growth. Manufacturers will be able to benefit from RFID tracking on the production floor, but also in packaging and distribution.
In case studies, such as the use of RFID to track luggage at Hong Kong International Airport, RFID tags have been shown to provide read rates of up to 97%, compared to 80% for optically read barcode tags.
North America will Lead IoT use in Manufacturing
Although China and the United States have often swapped positions at the top spot of total manufacturing output, it is the U.S. that will lead IoT implementation in manufacturing for 2016. This is mostly due to high automation, frequent technological advancements, and a history of early-adoption of new technologies. This contrasts greatly with China, where output is high, but production methods differ, favoring low-cost labor in place of high levels of automation.
This increased trend in IoT adoption is expected to benefit other areas of North American industry, such as the R&D and software sectors. Cisco Systems, Microsoft, Intel, IBM, and General Electric are all U.S. based multinationals that lead in IoT sensor and software development. German companies SAP SE, Siemens, and Bosch, are also IoT leaders that will benefit from increased demand for IoT solutions in manufacturing.
Bottom Line – IoT Shows no Signs of Slowing Down
Regardless of initial reluctance to adopt, and increasing security concerns surrounding IoT devices, the industry as a whole is showing no signs of slowing down. Firms like Gartner research have predicted that there will be almost 7 billion sensors in use by the end of 2016, and that enterprise level software spend will total over $860bn, globally.
Manufacturers will realize more efficient operations which stretch from administration, to production floors, and even distribution. The internet of things doesn’t represent a flawless group of technologies, but it is set to be a significant aspect of the future of high tech manufacturing, no matter which way you look at it.
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