What the Internet of Things Means to Manufacturers

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If the Internet of Things (IoT) is so wonderful, why aren’t more manufacturers embracing it? Many industrial companies claim to see the value in Internet-connected machinery and equipment. Yet there’s a significant disparity between IoT rates of adoption and the expectation that everything that can be Internet-enabled will (eventually) become Internet-enabled. IoT can improve operational efficiency, but you’ll have to get beyond all of the hype about “smart” toasters first. Here’s how – and here’s why IoT matters to manufacturing.

Finding New Ways to Add Value

Many large manufacturers claim that IoT is important. When the consulting firm Accenture surveyed 500 senior executives last December, 85% of respondents said that they expected the Connected Industrial Workforce to be commonplace in their factories by 2020. This two-way exchange between “smart” machines and human workers will boost productivity, the executives added. For supply chain partners like small-to-medium manufacturers, determining what this means is a key piece of business intelligence.
For example, if a large manufacturer plans to increase productivity by automating operations with Internet-enabled machines, can you find new ways to create business opportunities? By offering new packaging and part delivery systems, you may be able to speed part deployment and increase assembly efficiency. Alternatively, small-to-medium manufactures may have to respond quickly to issues that a larger company reports on-the-fly. To meet these informational needs, your own IT infrastructure may need to change.
But what do large manufacturers really want if their stated expectations don’t match their actual plans? In the Accenture survey, only 22% of senior executives say that they plan to take full advantage of the Connected Industrial Workforce. Many cited concerns about data security and a shortage of skilled workers. This is consistent with a February 2015 report from PwC and the Manufacturing Institute that concludes “we may still be several years away from seeing widespread adoption of IoT technology and systems.”

Connecting Manufacturing to Logistics

Typically, media reports about IoT and manufacturing focus on well-known firms. For example, an August 2015 Industry Week article called The Internet of Things Will Make Manufacturing Smarter cited Siemens, General Electric, Harley-Davidson, and Cisco as examples. Siemens uses computers to handle 75% of its value chain. GE and H-D are monitoring manufacturing operations and increasing efficiencies. Cisco is mastering Big Data and has deployed its virtual manufacturing execution system (VMES) platform.
The IoT successes of these multi-national manufacturing firms are measurable. Yet there’s also value in listening to advice from industry leaders who may be lesser known. Siegfried Dais, deputy chairman of the board at Robert Bosch GmbH, and Heinz Derenbach, CEO of Bosch Software Innovations GmbH, are two IoT thought leaders who shared their insights in a 2013 interview with Forbes magazine.
As Dais and Derenbach explain, companies of all sizes are living in what Forbes calls “a new era for manufacturing and logistics”. When there’s no longer a difference between the flow of information and materials, engineering becomes inseparable from IT. Inventory costs and capital expenses may fall, but demand for making sense of all this data will rise. Determining what this means for your manufacturing business is critical. To find your place in the Internet of Things, start by looking at your own value chain.


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