The challenges and opportunities of the Internet of Things.
The manufacturing industry has entered the digital age. The Internet of Things (IoT) is changing the way manufacturers approach the development and maintenance of their products. They note that IoT can help improve the quality, efficiency and productivity of their manufacturing processes. We are in the midst of a new industrial revolution, with new opportunities to create added value. This can range from improving asset performance, production quality and operational efficiency to identifying opportunities to generate additional revenue with new products and services.
This fourth industrial revolution is being defined and fuelled by the IoT and the convergence of digital and physical assets within the factory. This new wave of change is the logical continuation of the three previous industrial revolutions. During the first industrial revolution, mechanisation and steam power enabled manufacturers to increase productivity and perform new production tasks. This was followed by the advent of the assembly line and electricity during the second industrial revolution. These enabled manufacturers to dramatically increase output. The third industrial revolution came about as a result of automation and globalisation of the value chain. This enabled manufacturers to reduce costs and further increase output. Industry 4.0, as it is called in Europe, represents the fourth industrial revolution. Supported by IoT, it allows manufacturers to take control of the entire value chain to the next level throughout the entire product lifecycle.
The current state of affairs
The manufacturing industry has undergone profound changes over the past 50 years. Currently, fluctuations in demand are increasing as customers demand personalised products that they also want delivered in record time. Products and production processes are becoming increasingly complex, and meanwhile global competition is increasing. Despite this, some things remain unchanged.
Top managers in the manufacturing sector are under constant pressure to improve product quality and margins, boost speed and increase flexibility. At the same time, they face the task of ensuring more environmentally friendly production processes and ensuring the health and safety of staff. These goals are difficult to achieve even with the most modern facilities and equipment. As a result, they are becoming increasingly beyond the reach of top manufacturing executives. Many factories operate with systems and equipment that act as an anchor against any desired innovation.
Factory environments are becoming more diverse and complex. For instance, you may be using a business PLM system and an ERP system that support product development and business processes, respectively. Each factory operates equipment and production resources from a variety of suppliers, isolated systems for production, quality assurance and maintenance, secondary sensors, unstructured data (such as blogs or operating manuals) and external data sources with climate data and other information. This complexity significantly hampers overview, flexibility and, ultimately, performance. Without the right overview, it is almost impossible to spot and fix problems as soon as they arise.
Lovejoy's Law published in 1995 is still undiminished. The three main levers in the manufacturing sector that can contribute to operational improvements are:
1. Capacity and capability (machines, people and training); these are costly and time-consuming
Stock (materials) 2.
Information 3.
But let's face it: factories are by no means suffering from a lack of information. Huge amounts of data are generated by primary and secondary sensors on the factory floor, by operators, by business and production systems, and by external data sources. Manufacturers lack the ability to harness all this information as input for faster decision-making. Indeed, according to a Gartner estimate, 70 per cent of all data captured during the manufacturing process remains unused.
The role of the IoT
To improve operational performance, manufacturers need to focus on unlocking their vast, underutilised information resources. As more and more manufacturing assets become smart and connected using IoT platforms and connectivity is extended to plant-wide or even enterprise-wide systems, opportunities arise to gain new insights and optimise manufacturing processes. The resulting 'Industrial Internet' is transforming the manufacturing sector and triggering a new wave of improvements. This is forcing manufacturers to rethink their current approach to extracting value from their manufacturing assets.
The Industrial Internet promises to end the lack of insight and agility by creating a real-time digital closed-loop for all equipment, systems and people, both within factories and across the supply chain. As manufacturers move their data and the complexity of their factory systems to the cloud, they can leverage technology to perform predictive analytics and other advanced functionality. This enables manufacturers to:
- make decisions faster by connecting and integrating disparate manufacturing assets and internal and external information sources in real time
- streamline manufacturing processes and continuously innovate through predictive analytics, digital processes and through augmented reality technology that guides staff as they work
- achieve optimal results through continuous process improvement based on closed-loop and customisable manufacturing processes.
How big is the potential impact of the Industrial Internet or Industry 4.0? According to the McKinsey Global Institute report "Unlocking the Potential of the Internet of Things", factories possess the greatest potential to create value in the age of IoT. The $1.2 billion to $3.7 billion in economic value that IoT is projected to contribute to in factory environments by 2025 represents as much as 30 per cent of all the business value it creates within all environments identified by McKinsey. The prospects for home automation, smart cars and so on stand in stark contrast to this.
The three largest global economies (the United States, China and the European Union) have already launched several initiatives that contribute to accelerating the deployment of IoT in factory environments. Examples include the US manufacturing sector's smart manufacturing initiatives, the Made in China 2025 programme and the Industry 4.0 movement in Europe. More importantly, manufacturers such as GE and Airbus are paving the way to demonstrable added value with initiatives such as the Brilliant Factory Initiative and Factory of the Future. With IoT driving change in the way manufacturers operate and develop products and services, the manufacturing industry is about to undergo another profound transformation.
This blog was written by Damian Lyant. View his profile here.
