The Industrial Internet of Things (IIoT) – alias: IoT, Industry 4.0, Fourth Wave of the Internet, etc., etc. – Is it our Next Big Competitive Thing?
I0T does appear to be exploding. And if the spike seen recently by some 350+ selected companies who were surveyed continues, those missing it could be a risk. Companies of all sizes and kinds are on the move, driven by what they see IoT can do for them. IndustryWeek reports that America’s largest industrial company – GE – is now relocating to Boston looking to become a leader in the digital industrial era.
This article is a ‘Quick Read’ on IoT backed up by two studies by MPI – an organization known for helping Consortia and MEPs (Manufacturing Extension Partnerships) members ensure their visions are provided accurate data and definitions of what constitutes a World Class company. The first of its two initial IoT studies was entitled The Internet of Things Has Finally Arrived – with its Executive Summary published August/September of 2015. the survey’s purpose was to detect the state of readiness of US companies to take part in IoT.
The second survey was published November/December 2016 to show how IoT had changed since 2015. Its Executive Summary appeared May 2017, titled What a Difference a Year Makes: Manufacturers Around the World Are Now Profiting from the IoT (Are You?). Both Executive Summaries are available through this issue thanks to MPI’s CEO, John Brandt. Some will recall John as a past Publisher and Editor-in-Chief of Penton’s IndustryWeek Magazine during the early Consortia era.
Looking Back to See Ahead…
The building of the IoT excitement caused me to think back to the competitiveness technologies we had at Westinghouse’s near-cutting-edge Aerospace Design & Development Engineering group in the late 1960s. Such reflections help get one’s mind around the emergence of what could be a new and radically different paradigm – such as the IoT paradigm we face now some 40 years later.
In those early days, Westinghouse was researching in Canada a range of cutting-edge products beyond its gas & steam turbines, appliances and waterwheels. Some of them included electroluminescent; high-resolution reconnaissance devices; micro-electronic operational amplifiers in TO-5 cans, with a few advanced components from the CF-105 (Arrow) era still in the cupboards. The driving force at the time was on developing new things with conventional manufacturing & management methods.
Snapping ahead 20 years to 1983 (just after our first major recession), it was clear we had to make things better – and faster. Toyota showed us this reality by opening a huge lead in automotive productivity that put them far ahead of General Motors. And they did it by assembling 1914 Flow Manufacturing with respect-based management which they melded with existing technologies and components during the 80’s. The game-changer though, was the deployment of this respect-based management of people and processes, which eventually became ‘Lean Thinking’ in 1990.
Another 20 years pass, Lean is now applied ubiquitously – but now with a greater emphasis on People-Centric leadership which you will see at this year’s AME International Lean Conference in Boston. http://Ame.org/Boston That, combined with a new global intensity for innovation; customer driven excellence; and the greater integration of people (employee involvement) but this time with a different game changer – the deployment of new ‘componentized-technologies’ with onboard intelligence.
So this brings us to today where winners are deploying refined People-Centric management; more advanced processes & software; and intelligent & miniaturized technology. IoT’s explosion makes this an internet-based game-changer. It’s a mind-boggling new paradigm. It enables inter-communication among all the ‘elements & components’ of competitiveness that includes people systems. In other words – intelligence is now added to every building block of our components (human and non-human), processes, and technologies.
The big game changer here is that the characteristics of such systems can be continuously changed/reconfigured on the fly – since all elements, components, processes (including people systems) etc. have intelligence built into them that allows inter-communication with all others.
This generates a mind-boggling blindingly fast competitive force where every piece of it can connect to every other piece while the entire entity can be reconfiguring in flight. Kind of makes one’s head hurt.
The Technology Strategy Board defines IoT as…
“The Internet of Things (IoT) describes the revolution already underway that is seeing a growing number of Internet-enabled devices that can network and communicate with each other and with other web enabled gadgets. IoT refers to a state where Things [e.g. objects, environments, vehicles, and clothing] will have more and more information associated with them and may have the ability to sense, communicate, network, and produce new information, becoming an integral part of the Internet.”
Highlights from the 2015 Executive Summary: Internet of Things Has Finally Arrived – Unfortunately Most Manufacturers Aren’t Ready. To get it click on http://mpi-group.com/wp-content/uploads/2016/01/IoT-Summary2016.pdf
From August to September 2015, a manufacturing industry IoT readiness survey was executed to detect just how ready manufacturers were to join smart devices and embedded intelligence within their plants and processes. It gave us a snapshot of where 350 selected manufacturers were. The survey was sponsored by Rockwell Automation, QAD, and BDO – and led by the MPI Group. Please review the MPI Executive Summary: The Internet of Things Has Finally Arrived
This survey confirmed that most manufacturers were not ready to exploit IoT; had limited understanding of IoT; and were unaware of how to apply it to their businesses. The investigation included Intelligent Plants & Processes; Intelligent Products, and provided a profile of the survey participants.
Intelligent Plants and Processes
The top five objectives for using smart devices with/without embedded intelligence were:
1. Improve product quality
2. Increase speed operations
3. Decrease manufacturing costs
4. Improve maintenance/uptime
5. Improve information for business
And, the top five IoT capabilities they saw as barriers & challenges were:
1. Identifying opportunities/benefits of IoT
2. Network capabilities to handle the IoT
3. Budget/resources to help or expand IoT
4. Incorporating smart devices or embedded intelligence
5. Adapting existing technologies
The summary indicated that only a few manufacturers have the network infrastructure to accommodate IoT machine-to-machine or machine-to-enterprise communications. Many will need major upgrades or overhauls. It highlights that IoT needs more than just technology as it will require operations and IT staff and support.
Competitively speaking, two-thirds (63%) of the manufacturing executives believe that IoT will increase profitability over the next five years. We found it interesting that only 30% of the participants considered security to be an issue with IoT’s application.
While most (70%) of those surveyed indicated they have some plans to embed smart devices in their products, 30% have no plans to do so. It is their hope that by embedding smart devices or intelligence it will: increase revenue from new products; increase market share; access data from products or services in the field; increase profit margins per product; and improve branding, market awareness, and excess to new markets & sectors.
However, their top five challenges in pursuing IoT-enabled products included: the identification of opportunities and benefits; a clear understanding of customer needs/value; the technologies needed; the budgets/resources to develop the products; and where & how to get started.
Profile of IoT Study Participants
A majority of the selected 350 participating companies were private companies with 84% having been in business for more than 20 years. 35% had annual revenues of $50 million or less, with another 36% having revenues above $1 billion. The top five industries represented were manufacturers of machinery, food products, fabricated metal products, chemical products, and electrical equipment including appliances and components. 96% of the participants had facilities in the US with more facilities in Canada, Europe, Asia, China, and Mexico. 93% are making progress towards world-class manufacturing status, with some achieving it.
Highlights from the 2017 Executive Summary: What a Difference a Year Makes – Manufacturers Around the World Are Now Profiting from the IoT – Are You?. To download: Launch www.mpi-group.com from your browser and enter the MPI site. Find ‘2017 IoT Executive Summary’ and click “Add to Cart”; Go to upper shopping cart image and click “Check out”; Add your mailing data; and lastly click “Place Order”.
What is valuable about this IoT Survey is its ability to compare its facts to the earlier 2015 IoT survey. In the words of John Brandt, MPI’s CEO, “This year’s report looks at those same issues – from a global perspective – as well as opportunities and improvements.” He adds, “The data reveals a vastly greater understanding and use of the IoT by manufacturers – resulting in one-year increases in productivity, revenues, and profits for those firms in the vanguard of IoT implementation.”
This follow-up summary highlights the same categories used in the first survey of: Awareness and Expectations; Intelligent Plants and Processes; Intelligent Products; and IoT Study Participants as with the first survey. This survey is also conducted by the MPI group with a similar survey population of 374 manufacturers participating, with BDO and SAS Institute Inc. as sponsors.
Awareness and Expectations
There is no question, interest in IoT is growing. In fact, 90% of manufacturing executives believe that the IoT will have a significant or at least some impact and see an uptick of 19% on business in general – and an uptick of 20% for their own companies. However, a handful of manufacturers are still ignoring the IoT technologies.
Intelligent Plants and Processes – The application of IoT
There is much to consider when it comes to the Application of IoT. For example, manufacturers report doubling their incorporation of embedded intelligence in their production processes and equipment by 50% from last year’s 25% figure. Similar gains are reported in back office (non-production) applications where smart devices are now used in 42% of non-production processes – up from 25% last year. From an overview position, the top objectives for incorporating smart devices and/or embedded intelligence into plants and processes relate to manufacturing quality, speed, and costs. (See the download link above for more data).
IoT challenges and security concerns remain like those reported in 2016. The biggest challenge still lies in identifying how, and where, to get started with IoT. Interestingly, 81% of executives are confident – or very confident – of their cyber risk management programs. Only 19% of executives believe that security of non-corporate devices (e.g. smart phones) is an IoT challenge. The survey feels this may be because 53% of the firms have a BYOD (bring your own device) policy in place which is up from 39% last year.
Regarding IoT Networks & Access to Data, network infrastructures have improved from last year to accommodate IoT machine-to-machine communications (e.g. sensors in one machine trigger actions of another machine and in machine-to-enterprise communications). Currently, some 25% of networks are now capable which is definitely up from 10-13 % in 2016.
For details on ‘Managing & Investing in the IoT’, and, ‘IoT Process ROI’, download the full Executive Summary. It shows a 72% increase in productivity through IoT, as well as a 69% increase in profitability.
The survey indicates IoT-enabled products are incorporated widely, such as in shoes, light bulbs – and even concrete. It states, “One-third of product dollar sales (median) sales were derived from products with embedded smart devices/intelligence, and 68% of manufacturers now have significant or some plans to embed smart devices or intelligence into their products”. The survey adds that, “For now, manufacturers are focusing primarily on their own and finished products, but other innovations are increasing in popularity.” This section concludes with the observation, “Despite executive interest in IoT-enabled products, challenges in developing them stay considerable.”
IoT Study Participants
Approximately 72% of the 374 manufacturers participating are private companies (up from 60% in 2016). 64% have been in business for more than 20 years. 38% of the participants had annual revenues ranging from $10-100 million, 31% ranging from $101-500 million, and 31% with revenues above $500 million. This survey is also conducted by the MPI group, with BDO and SAS Institute Inc. as industry sponsors.
Our thanks go to John Brandt and MPI for these IoT Summaries – they are worth a close look to get started. John is a good friend who offered guidance to the HPM Consortium in the early ‘90’s, and currently the CEO of the MPI Group. MPI has conducted Manufacturing Studies for some two decades as benchmarking research focused on manufacturing plant performances and best practices. MPI also conducts the Next Generation Manufacturing Study – an assessment of companywide capabilities to compete in the next decade. For well over a decade, HPM and HPS Lean Consortia used MPI survey data to clarify what world-class was and to keep our companies moving in the right direction. This data was used to confirm the rightness of their annual True North Operational Visions.
The MPI Group