How will the Internet of Things (IoT) Impact Manufacturing?

The Internet of Things is a world that connects people, data, processes, and physical things. Beyond the consumer realm, the IoT is creating a new paradigm in the business world. So, how will the IoT impact manufacturing?

Creating new business models

The continuous stream of data that “things” can deliver back is creating new business models for manufacturers.

For example, large equipment manufacturers now can charge customers a pay-per-use fee, rather than enter into simple rental agreements. This model might include charging customers based on how much they use a product, rather than charging a single upfront price.

In the support arena, smart products can send an alert when service is needed based on operating performance, rather than chronological milestones, saving customers time and improving service profitability.

Connected products can provide technicians with valuable insights about specific components, parts and performance issues, allowing the technician to be well prepared for the service call, with the appropriate replacement parts and recommendations for repair or replacement. Other business models using smart sensor data wait to be discovered and may offer a significant competitive advantage to first movers.

Read more: Internet of Things from the Food and Beverage Industry Perspective

Manufacturing smart products

More of the products that manufacturers produce are being designed for the IoT. One high-visibility example is the smart car. Already, major auto manufacturers, including Ford®, General Motors®, Toyota®, and Volkswagen®, are producing connected vehicles with WiFi capabilities throughout the passenger cabin. Some models combine cameras and sensors to help drivers avoid collisions and parallel park automatically.

Future customers will demand products and services that are more customised to their specific needs and preferences. The IoT provides a new way of thinking about design that will revolutionise traditional products and create new product categories. The ubiquity of WiFi, coupled with the falling cost of semiconductors, sensors, and other hardware, enable manufacturers to develop cost-effective, smart products for more types of use cases.

Read more: Internet of Things (IoT) and the Future of the Retail Industry

Implementing smarter manufacturing

In manufacturing environments, “mobile-ready software will allow plant managers to have access to data such as equipment efficiency, line efficiency, data visualisation tools and alerts from any location,” enabling facilities and production managers to get out of the control room and have greater visibility into operations.

A 2013 survey by the American Society for Quality (ASQ) found that 82% of manufacturers who have implemented smart manufacturing experienced better efficiency; 49% enjoyed fewer product defects; and 45% noted increased customer satisfaction.

Smart manufacturing in a connected environment can contribute to fewer product defects by providing faster identification of equipment malfunctions and failures. Real-time monitoring of equipment and manufacturing lines can find even slight variations in production levels, equipment operation, and product quality. Sensors can identify fluid leaks, pressure change, and much more, leading to better asset utilization and more proactive maintenance of critical equipment.

Beyond identifying problems, a connected manufacturing environment can enable machine to machine (M2M) interaction. In M2M interaction, not only does a sensor detect a fluid leak and alert the maintenance department, but it also alerts the other connected machines that the process workflow needs to be adjusted. Customer orders may need to be rerouted and delivery schedules adjusted. Escalation alerts and event triggers keep small incidents from escalating into massive ones, allowing personnel to respond quickly to potential emergencies—before lines need to be shut down or jobs delayed.

This prevents materials and/or finished goods from going to waste and protects important equipment from more serious damage. Sensor data feeds into the integrated ERP solution, giving managers machine-level visibility into operations and processes on the production floor.

The IoT also can help promote sustainability. Using sensors to regulate temperature and energy usage in different areas of the plant can help manufacturers reduce energy costs and lower their environmental footprint. Writing for TechTarget, Tony Kontzer noted, “Using sensors to monitor manufacturing equipment and environments is nothing new. But using those sensors to talk to other equipment and automatically feed data into plant and energy management applications is one of manufacturing's newest frontiers.”