Manufacturing is predicted to lead both global and USA spending on Internet of Things (IoT) solutions in 2018, investing $190 million worldwide according to MPI Group.  These investments in IoT will be largely focused on manufacturing operations.  Internet of Things technologies allow manufacturers to digitally connect complex factory machinery and parts and monitor data generated by them. The value in doing so is that this data can be used for analytics that can generate new business insights, new revenue and cost reduction opportunities, new business models and more.  For manufacturers contemplating an investment in IoT, StrategyWise provides answers to some common questions about implementing IoT solutions.

What is IoT in manufacturing and how is it different than implementing sensors and robots?

For years, companies have been investing in modern sensor, robotic and other automation technologies. The Internet of Things is all about connectivity of these technologies across an integrated platform, linking physical assets to each other and to people.  Companies are looking to use IoT solutions to connect their numerous automated units, processes, and sensors that are spread across locations in order to gain deeper visibility across every stage of their manufacturing process.  Companies can leverage IoT to take machine-to-machine and sensor data and use it detect issues earlier and to a greater extent than humans alone can.  The use of IoT in manufacturing has been dubbed the Industrial Internet of Things, or “IIoT”.

Is the Industrial Internet of Things really going to happen?

Until now, the connection of legacy systems had been holding widespread Internet of Things implementation back. However according to a 2017 MPI Group study, nearly a third of production and non-production processes and equipment already incorporate embedded intelligence. Similar percentages of manufacturers have a company IoT strategy in place.  Manufacturing has reached a tipping point where a proliferation of cost effective IoT technologies and platforms that has made IoT accessible to companies of all sizes and the proven benefits have pushed the IIoT into the mainstream.  The manufacturing industry is now moving beyond learning and understanding what the IIoT id, and are now focusing on developing strategies to use it.

In StrategyWise’s neighborhood, manufacturers such as Toyota, Mercedes Benz and Harley Davidson are implementing IoT and demonstrating proofs-of-concept. Toyota has used IoT to reduce real time errors which in turn has minimized rework and scrap. These improvements are reported to have saved the company’s Alabama facility $550,000 annually. Mercedes Benz has implemented a global Smart Factory strategy. It is networking products, machines and the entire manufacturing environment via the internet.

What are the benefits of IoT solutions and do they outweigh the costs?

IoT can improve common manufacturing metrics.  In the previously cited MPI study, 72% of manufacturers reported increased productivity and 69% reported increased profitability from the application of the IoT solutions.  In general, IoT replaces the onerous task of keeping track of multiple variables during production in order to optimize operations. IoT  enables this to happen automatically and in real time, as opposed to periodically. A primary benefit of the IIoT is cost reduction in manufacturing operations. IoT technologies can significantly improve visibility in manufacturing to the point where each unit of production can be “seen” and monitored at each step in the production process. This allows for inexpensive monitoring of equipment performance data which can be used for preventative maintenance on the factory floor and out in the field. This capability reduces downtime and delays.

A “networked factory” can also allow for production to respond more rapidly to market fluctuations and deliver customized products.  The factory can produce at a greater speed by allowing for simplified modification of production facilities.  It can be made more efficient because production facilities can be controlled from anywhere and inventory management can be constant.  Beyond manufacturing operations, there are huge supply chain efficiencies to be gained by accessing real time supply chain information by connecting IoT enabled plants to suppliers. Manufacturers and suppliers can better forecast across the value chain, manage inventory flows and reduce disruptions.

A more recent benefit to materialize is that manufacturers who have developed large scale IoT platforms have been able to further monetize these investments by entering new markets and deliver products and services to new industries. We see examples of companies such as Bayer taking products they manufacture and infusing them with IoT capabilities. They are producing “smart versions” of products (in Bayer’s case, a pest trap) that collect information from the product and provide analytics services around the product’s applications. Companies are also finding a new source of income selling their software platforms to other manufacturers.

What can we do with all that IoT generated data?

Data exists everywhere in manufacturing, such as in ERP systems, machine tools, spreadsheets across departments and even outside of the company with suppliers.  The goal of the IIoT is to automate the collection and analysis of such data across operations. When data related to each step of the manufacturing process is analyzed and shared across the organization and value chain, value is created.

One daunting issue that StrategyWise has observed is that manufacturers struggle to decide how they will use all the data generated.  As a first goal, plant management and team members can benefit from real time data to inform and improve decisions making and planning. For instance, with a robotic inspection device, which perhaps measures hundreds of data points for each physical part, the only way to make use of such huge amounts of data is to incorporate data analytics and build dashboards. A human could not do this alone.  Companies can also eliminate time consuming face to face meetings used to review historical reports. To do so, they must develop the skills and business analysis tools, such as a dashboard that provide diagnostics and statistics, or even a simple colored light system for the shop floor.  Data that is not used can be stored for future analysis. It may one day become valuable and even generate new business models and ideas.

How does a manufacturer get started with IoT?

Here at StrategyWise we understand why companies have difficulty deciding where to use IoT in their manufacturing processes. Industrial uses of IoT are as varied as the number of firms that build products.  As with any big data initiative, StrategyWise suggests that manufacturers start small, focusing on building capabilities such as measuring data or taking action on insights. It is often best to identify a small, short term value adding IoT project that proves benefits and serves for learning about IoT implementation. For example, many companies have legacy systems and machines that are not integrated. A company could target processes that should be improved, and which include legacy equipment needed to communicate with the factory and which can accommodate embedded connectivity.   It could also identify an individual troublesome process or bottleneck that hurts margins and that could be improved with real time data. This might be a single part or part of a production line. Start there, and gradually connect and expand to the manufacturing of an entire object, along the way securing the right skills and tools to analyze the data and make recommendations.

If your manufacturing company needs help discovering how to begin IoT integration and leverage IoT data, contact us today. We can help you identify, define and prioritize use cases for IoT in your manufacturing operations.