March 17, 2020
The Benefits of IIoT and Its Impact on the Manufacturing Industry
Digital disruption has transformed every vertical from retail and entertainment to healthcare and education. However, manufacturers lag behind other sectors due to a unique set of challenges that complicate digitization efforts.
Manufacturers now compete for business on a global scale while managing rising customer expectations along with supply chain threats like outbreaks, disasters, and conflicts that indirectly impact operations.
In light of these challenges, manufacturers are increasingly looking toward the Industrial Internet of Things (IIoT) to stay competitive, with IDC predicting global IoT spending will hit the $1 trillion mark by 2022.
In this article, we’ll discuss IIoT benefits, risks, and potential use cases that manufacturing companies should know before diving headfirst into an IoT initiative.
What is IIoT?
Before we dive into a list of IIoT benefits, let’s quickly define what, exactly, IIoT is.
The Industrial Internet of Things (IIoT) is a subcategory of the Internet of Things (IoT).
For the uninitiated, IoT includes a wide range of devices, computers, and vehicles equipped with embedded sensors and managed by software.
These devices are designed to exchange data with other devices through the internet, relying on cloud-based storage to enable remote access, monitoring, and control. Common applications include self-driving cars, smart doorbells, and wearable fitness trackers.
IIoT takes those core concepts of IoT (embedded sensors, cloud-based data, connected devices) and applies them to the manufacturing and industrial sector.
The critical difference between IoT and IIoT is that IoT typically describes consumer-facing applications, designed to make life easier (or more fun) for end-users. By contrast, IIoT focuses on making large scale improvements to industrial environments in industries like manufacturing, logistics, energy, and aviation.
IIoT leverages a wide range of tools and technologies from tiny environmental sensors to supply chain monitoring and advanced analytics to make better business decisions and gain a competitive edge.
Get it right, and Industrial IoT promises massive productivity gains, cost savings, and quality and safety improvements. In these next few sections we’ll look at use cases, as well as IoT benefits and risks.
Improving Inventory Management – Cloud-Based Inventory Systems
IIoT benefits the inventory planning processes in a variety of ways.
For example, shelf-level sensors could be used to order supplies when they fall below a certain threshold. As a result, companies can reduce waste caused by over-ordering (think storage costs, expired materials) while also maintaining the supplies needed to keep production lines moving. Sensors might also be applied to perishable items, sending alerts if humidity levels or temperatures fall outside the normal range.
Additionally, automated inventory monitoring frees employees from manual inventory checks, reducing instances of human error, and allowing employees to focus on adding value in other ways.
Gain Supply Chain Visibility
IIoT technologies also improve how inventory is managed outside of the facility, connecting organizations to suppliers.
Users can access real-time supply chain information by tracking materials, manufacturing cycles, and individual products as they move through a global supply chain.
This data helps manufacturers predict potential issues and make purchasing decisions based on a range of factors—from natural disasters and civil unrest to increased freight costs. On the supplier side, IIoT supports greater transparency, enabling more realistic estimates of turnaround times, materials available, and work in progress status.
Improves Product Design & Quality Controls
IoT sensors can be used to collect aggregate product data and third-party data associated with each stage in the product cycle. That data can help identify the impact of external factors on the final product.
For instance, that might include factory temperature, which raw materials were used, and other environmental factors. Or, you might track things like waste or the impact of transportation in an effort to create a more sustainable end product.
Additionally, you might look at IoT data alongside customer sentiments, allowing you to identify and amend quality issues during production.
Real-Time Insights Provide Greater Business Agility
According to KPMG’s 2018 CEO survey, 66% of respondents reported that agility is the new currency of the manufacturing business.
In other words, those who move slow get left behind.
IIoT changes the game by collecting data from various “things,” which can be analyzed with advanced analytics software alongside transactional information, customer feedback, and market signals.
One of the most critical benefits of IIoT is its ability to evaluate data at the macro-level—enabling informed decision-making about maintenance needs, potential supply chain disruptions, and process improvements.
Location Tracking Offers Surprising Cost Savings
IIoT sensors also allow organizations to enable location tracking on equipment—a “find my phone” of sorts for tractors, tools, and other assets.
This piece in Wired highlights the benefits of IIoT location tracking—most notably the cost savings potential something as simple as helping workers locate equipment can offer. In it, Robert Schmid, Chief Technologist of IoT at Deloitte, says one of their clients was able to save $3M per production line each year by outfitting their equipment with location-tracking sensors.
He noted that after the equipment is built, it goes to a storage lot that could be nearly a mile long on each side. Tracking devices, of course, reduce time spent walking the lot, but also could help organizations reduce theft—a big problem for construction companies that leave equipment at job sites during off-hours.
IIoT Promises Reduced Downtime and Repair Costs via Predictive Maintenance
Historically, equipment monitoring was a preventative effort done manually on a time-based schedule, whether or not service was needed.
Predictive maintenance allows organizations to avoid unnecessary labor costs associated with preventative maintenance, using IIoT technology to determine when service is needed.
For example, you might attach sensors to heavy machinery that monitors for signs of wear and tear, overheating, or excessive vibrations that may lead to an unexpected breakdown. Those sensors transmit information to maintenance crews, manufacturers, and engineers, alerting them to any issues detected.
The main benefit is, predictive maintenance helps companies get ahead of unexpected system failures and breakdowns, increasing the life of expensive equipment while, at the same time, reducing costs associated with parts, labor, and downtime.
Safety and Compliance
Beyond the cost savings and productivity gains, IIoT can be used to keep workers and consumers safe. In the energy sector, sensors might be used to indicate a gas leak. Or, it might alert operators that an oil well is approaching dangerous pressure levels, allowing ample warning ahead of an explosion.
IIoT can help keep workers safe inside manufacturing facilities, as well. Sensors can be used to monitor workers’ locations while operating dangerous equipment or performing repairs in a remote part of the facility. In this case, IoT-connected safety equipment can alert someone nearby, ensuring immediate action and faster access to care.
IoT Benefits and Risks: Best Practices for Success
The road to making IIoT promises a reality isn’t an easy one. A 2017 Cisco survey found that nearly 75% of IoT projects were failing, with 60% stalling out in the Proof of Concept phase. The report found that in many cases, human factors such as cultural issues and poor leadership were to blame.
Poorly-implemented IoT also comes with the risk of costly cybersecurity issues or problems associated with a lack of standardization between legacy tools and new additions.
As such, before you do anything, you need to develop an air-tight plan of attack. This means developing a step-by-step process with short and long-term objectives, a set of metrics for tracking your success, and defined workflows that support cross-departmental collaboration.
A few things to include:
- Consider where IIoT can improve your business strategy. Are certain areas a black box when it comes to extracting insights? Are there bottlenecks in your production process? This process might require an internal audit to uncover hidden IoT benefits and risks.
- Focus on Use Cases that Offer the Biggest ROI. Reimagine the end-to-end process for each use case including data management, automation, scalability, and interoperability. What metrics represent success? What’s working (or not) right now? Then, develop an analytics plan that tracks performance from the adoption stage forward.
- Make Security a Top Priority. Traditional security best practices won’t cut it for IIoT initiatives. A 2019 report from the Ponemon Institute found that 90% of IIoT adopters face “relentless, continuous” cyberattacks resulting in downtime and data breaches.
- Develop a Change Management Strategy. IIoT brings unprecedented visibility into big picture operations. But, without a mature, Agile culture in place, organizations can’t put those insights to work. IIoT is a collaborative effort, involving everyone from the production staff to the C-Suite, sales, and marketing. Address things like departmental silos and policies that prevent employees from accessing critical information.
- Continuously Develop Talent to Tackle the IoT Skills Gap. According to Microsoft’s IoT Signals report, just 33% of adopters have the talent and resources to realize their business objectives. The IIoT ecosystem demands specialized skills like data science and experience with AI and machine learning. Companies may not have employees with these skills and must develop a plan for recruiting, upskilling, and outsourcing to meet new demands.
Is Your Organization Ready to Realize IIoT Benefits?
From supply chain optimization and inventory planning to asset management, IIoT brings game-changing benefits to a wide range of businesses.
By arming organizations with massive, real-time datasets, IIoT enables smarter, faster decision-making with the potential to generate thousands, or even millions, of dollars in productivity and cost savings.
Ultimately, unlocking the true promise of IIoT requires the right culture, a skilled workforce, and a roadmap with well-defined use cases and measurable objectives.
Done right, an IIoT can help organizations optimize their production processes, make data-driven decisions, and drive revenue like never before. Contact 3Pillar Global to learn how we can help.