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How IoT in Manufacturing Will Change The Way We Make Things

iot in manufacturing
By: Dan Johnson
For many manufacturing companies, ERP has been a pinnacle of sorts for technological innovation. Sophisticated ERP applications enabled them to automate a host of functions and processes to help streamline both shop floor and business office operations.

And then along comes the Internet of Things. 

A new wave of sensors and connected devices is unleashing a torrent of data on unsuspecting companies. Research firm IDC estimates that within five years, 40 percent of all data will be generated by machines – some 20 to 50 billion devices. Companies are awash in data, much of it unstructured and unutilized.

With the growth of the IoT in manufacturing we’re going to see the parallel growth of a new job category for data scientists – what could be called an “actuary of data.” Someone with the unique skills that enable them to identify the usefulness of data within a supply chain and make it consumable for the manufacturer to improve operations and outcomes. 

As companies wrestle with how to effectively employ the IoT in manufacturing, lots of thought and discussion swirl around it, much of it struggling with the central question, “what information is critical to me for driving my business forward?” IoT is blurring the boundaries between physical and virtual systems. ERP, supply chain management (SCM), and other systems used by manufacturers will eventually be seamlessly interconnected across platforms, people, equipment, and processes.   

Manufacturers lured by the siren song of IoT connectivity and the potential wealth of data associated with it should start by asking themselves several questions: 

  • What new data becomes available through the IoT?
  • Of that new data, what new information does it yield and what new knowledge does it provide that will be a game-changer for my business?
  • How will that information help me serve my customers differently – and better? 

The challenge for ERP systems will be to collect all this unstructured data from devices and connect it with the structured data in the business. Only then can it be effectively analyzed and utilized as a key component of a lean strategy and a catalyst for continuous improvement.

According to IDC, only about a third of manufacturers currently utilize the IoT in manufacturing, but early adopters see value in it for cost and competitive advantages, such as: 

  • Using the data for value-added customer services
  • Connecting assets to improve efficiency and reduce downtime
  • Improving supply chain visibility and efficiency

There is no question that over time the Internet of Things will provide a phenomenal benefit to a wide range of industries and businesses. Transportation, process manufacturing, communications, aerospace – anywhere there’s a controlled process – will all be significant beneficiaries of IoT capabilities.

However, manufacturers looking to turn themselves into connected enterprises via the IoT should carefully consider the risks. Every connected endpoint is providing intelligence to a larger information system and potentially vulnerable to hacking and attack.

But along with risk comes the opportunity for reward. When assets are connected to the IoT in manufacturing, manufacturers can improve performance, optimize scheduling, reduce operational risks and minimize total cost of ownership (TCO).