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Internet of Thing for Manufacturing in 2015

The Internet of Things has only just begun. The growth of smart connected devices will explode over the next five years. Will this explosion change your factories or will it change your business?

We see two basic perspectives on the Internet of Things (IoT). There is the Industry 4.0, very German, factory-automation perspective and then there is the business model transformation perspective. The two perspectives are not mutually exclusive. Industry 4.0 is the application of IoT to the intelligent factory which has already demonstrated the potential to save companies millions of dollarsi. Smart connected devices add value to products. The benefits can be reaped by the end-customer, but the value also creates new business opportunities and potentially turns the manufacturer's business models upside down. (site reference)

Companies and analysts serving the Factory Automation industry focus on Industry 4.0. Germany, as the world's high-tech factory, is the center of gravity for this movement. And McKinsey has predicted that 50% of the multi-trillion dollar economic value to be created by IoT developments will be in the manufacturing sector. Estimates of the current penetration of smart manufacturing are in the low-teens which means there is room for explosive growth. If your focus is manufacturing efficiencies, then you are paying attention to this.

For example, Lopez Research describes how companies will use IoT technology for predictive, preventative maintenance in production saving costs in production disruptions or to implement adaptive, automated logistics which react to material shortages, changes in production, and production bottlenecks.

IoT enables fundamental business model transformations as well. The smart connected products from your company enables a complete view of the product's real lifecycle. In the past, the product left the factory and went to the “dark side of the moon”, out of sight until a warranty claim arrived or a service issue arose

Gaining operational data from your products provides several benefits. The immediate benefit is that the data influences future designs which can lead to more reliable designs, creation of new features, or lower-cost products. The next benefit depends on your product and your customers, but most companies will find the operational data to be very valuable. The data could enhance field service operations or product support. The data could lead to incremental business with new products, or it could even enable your company to change the product-customer business model.

The spoils go to manufacturing and to the manufacturers

IoT technology will benefit both the factory in the Industry 4.0 sense and the company designing products in the broader product life-cycle management and business-model sense. In our opinion, companies which move quickly to adopt Industry 4.0 technologies will benefit from an early learning curve in IoT. This can give them an edge in applying IoT technologies to their products in the field to profit from better services, support, higher quality, lower costs, and potentially change their business model. In short, the spoils will go to the fast-learning company and make them more competitive.