IoT can trigger a new era in manufacturing

by CXOtoday News Desk    Jun 27, 2013


The Internet of Things (IoT) is fast becoming an enterprise reality. One industry vertical that can immensely benefit from this technology is manufacturing. As more manufacturers are seeking connectivity to smart devices, such as embedded sensors and image recognition, experts believe they can improve their bottomline with a dose of networked data – both wired and wireless networks - through the Internet Protocol. In a recent article by McKinsey & Company, authors Markus Löffler and Andreas Tschiesner discuss the opportunities and challenges that lie ahead for manufacturers leveraging IoT and what will it take for them to win in the marketplace.

The authors believes that IoT has already set in motion the idea of a fourth industrial revolution—a new wave of technological changes that will decentralize production control and trigger a paradigm shift in manufacturing. The article quoted Siegfried Dais, Deputy Chairman at Robert Bosch GmbH who mentions it is highly likely that the world of production will become more and more networked until everything is interlinked with everything else. And given the Internet of Things or Industry 4.0 as we call it when referring to manufacturing production and logistics could be at the forefront of this shift.

The article mentions that although lean manufacturing can certainly reduce inventories, manufacturing firms will need to coordinate with more and more suppliers—often globally, and with longer transport times, more manufacturing steps, and significantly more parties. To carry on these tasks, Dais believes organizations require algorithm specialists and software architects. “We will need “steering instruments”—new algorithms and applications that interlink millions of things, that ensure that everything runs stably, and that are synchronized across the entire value chain,” he says.

According to him, to drive real developments therefore two competencies must come together. First, we need to recognize the change potential, value creation, and cost reductions we can achieve if we apply innovative technologies. The second competency is finding people who are able to design robust algorithms - those who make the system user-friendly so that the people who use it everyday can immediately recognize problems and know how to react without getting tangled up in a web of interdependencies.

Heinz Derenbach, CEO of Bosch Software Innovations GmbH adds that by creating models, manufacturers can translate the physical world into a format that can be handled by IT. This requires mathematical, domain, market, and context know-how. In the connected world,  physical world should be integrated with business processes, including delivering data, sending events, and processing rules.

Process and device integration

Fusing processes and devices can lead to newer forms of interdisciplinary collaboration. Experts believe that the next big step will be to think through the interdependencies among the machine, the production components, the manufacturing environment, and the IT that connects it all, so that the production technology controlling the machines merges with the technical data of the components. This requires a high degree of standardization so that the machine knows what it needs to do to any given component, and the components can confirm that the machine has done it. Such IT linkage goes far beyond current manufacturing systems, points out the McKinsey article.

The authors note that when process and device is consolidated, the machines and work flows merge to become a single entity. The work flow ceases to exist as an independent logistical layer. it is integrated into the hardware. This way, when existing machine capacities only work through components on order, manufacturers will experience a trend similar that in cloud computing, where the customer purchases only virtual capacity. And Dais points out this will completely change the business of manufacturing completely, although it won’t happen overnight.

Supply-chain integration

The authors believe supply-chain integration will play a decisive role in new operating models. Dais mentions, this means with more information, the flow of materials and cycle time, manufacturers can lower their inventory costs and reduce the amount of capital required. However, this also involves huge amounts of data, and the fundamental prerequisite for such a system is that it is stable and reproducible. In such a scenario, Dais believes the market requires more analytical talent to solve the critical challenges of IoT and trigger a new revolution in manufacturing sector.