The Internet of Things (IoT) is often thought of as the next big thing, but the age of connected machines is already here, especially in manufacturing. From fabrication and assembly to the warehousing of finished products, and from back office technologies to the shipping of products around the world, the internet is a big component of modern manufacturing.
IoT adoption rate is high.” Nearly a third (31%) of production processes and equipment and non-production processes and equipment (30%) already incorporate smart device/embedded intelligence,” writes Digitalist Magazine. “Similar percentages of manufacturers have a company strategy implemented or in place to apply IoT technologies to their processes (34%) or to embed IoT technologies into products (32%).”
Most manufacturing companies see the biggest value of IoT when it comes to warehousing, shipping and document management – somewhere around eight out of 10 companies. But, nearly just as many see the value of IoT in assembly, packaging and fabrication.
While the adoption rate of the Internet of Things may be high in the field of manufacturing, there are still hurdles in the way IoT is integrated into existing systems. For one, manufacturing is not an industry of regularly updated machinery and equipment. Companies tend to use each piece until it is fully depreciated and, even then, use could be continued if the cash flow isn’t there to purchase a new one. Moreover, while machinery may need replacement, the lifetime of large equipment can be so long and the risk of downtime in the production line so great that it is possible for a company to have equipment that is incompatible with other equipment – let alone versatile and modern enough to support IoT technologies.
One issue that complicates matters is the age of the IoT technology systems. These systems are new and developing at an accelerated rate. Think of the situation like buying shoes for a toddler – the shoes may be great, but the kid will only wear them for a few weeks before they no longer fit. Buying into early technology can be a lot like that. When every year brings a new development or a better way of doing things, it can be hard to blame companies for adopting a “wait and see” stance on IoT.
However, the Internet of Things can help manufacturing companies create real value throughout the production line. “With IoT, manufacturers can gain a comprehensive view of what is going on at every point in the production process and can make real-time adjustments to maintain an uninterrupted flow of finished goods and avoid defects,” explains McKinsey. “We estimate that the Internet of Things can increase productivity by 10 to 25 percent by improving production efficiency.”
Creating Real Value
That type of cost savings can make it well worth the investment in IoT-enabled manufacturing equipment because of operational efficiency. McKinsey gives the example of General Motors using humidity sensors to optimize painting, and Harley Davidson using paint ventilation fans that are automatically adjusted to reflect current conditions. Not having to repaint something saves time and cost. At the end of the day, the investment was worth it for those companies and could be worth it for many more manufacturers if they ran the numbers.
The trick to making the adoption of IoT worth the investment is to put it in operational areas with the greatest amounts of inefficiency or waste. Over time, manufacturing companies can augment this by upgrading departments that could connect in with the areas of early adoption or by introducing new business models that incorporate IoT technology. This plan is apparent in tire company Michelin using IoT technology to improve operations, and then starting to sell tires as a service – monitoring usage and selling replacements.