By now, you’ve heard how the Internet of Things (IoT) promises to revolutionize manufacturing. But is IoT within reach of small to mid-market manufacturers, or is it strictly for large organizations?
It’s a question that I hear frequently as manufacturers in the small to medium enterprise (SME) space explore what IoT can mean for their business. Some dismiss IoT as hype, while others wrongly assume it requires a massive investment in technology and personnel. Most aren’t sure how or where to start.
The reality is that IoT is here today and growing at light speed. Global manufacturers will invest $70 billion in IoT solutions by 2020, up from $29 billion in 2015. That’s according to Business Insider, which adds that IoT “is changing business models, increasing output and automating processes across a number of industries. But no sector has been more impacted by this technological revolution than manufacturing.”
The implications are clear. Manufacturers that play a wait-and-see game risk losing ground to competitors that can take advantage of IoT to improve operational efficiency, support preventative maintenance, reduce costs, enhance quality and open new service revenue streams.
IoT entails networks of devices and sensors that capture data and communicate with each other. Those sensors are typically in equipment for production, assembly, warehousing and transportation, and increasingly in “smart” products sold to customers. IoT is a key element of Industry 4.0, which combines physical and digital technologies, such as analytics and artificial intelligence, to elevate manufacturing performance.
But sensors alone don’t translate into an effective IoT strategy. SME manufacturers need agile and robust back-end software to manage the data generated.
From Smart Devices to Smart Data
SME manufacturers already make extensive use of IoT devices. In the UK, 78 percent of SME manufacturers have industrial sensors in place, according to a survey by The Manufacturer and Oracle NetSuite. About 65 percent of SMEs collect digital data from manufacturing processes via shop floor data collection devices or manufacturing execution systems.
The problem is that data is massively underutilized because manufacturers lack a software system to collect, manage, analyze and act on that information. A well-designed ERP system is ideal for that task, yet many manufacturers rely on a collection of outdated applications that are poorly integrated and ill-suited for analytics.
Tellingly, just 35 percent of respondents to the survey felt their existing ERP system was capable of supporting business changes related to IoT and Industry 4.0. Without the right software, manufacturers can at best muddle through IoT initiatives.
A first step in embracing IoT is taking a hard look at your ERP and related systems. Assess their capacity for flexibility, integration and ingesting data from sensor-based devices. Size up the extent of reporting and analytics capabilities. Then, compare that to what’s possible with a modern, unified ERP system that runs in the cloud. The right ERP lets you move from smart devices to smart data for improved efficiency and decision-making.
Manufacturing IoT in Action
Bigbelly Solar, which makes smart waste collection and recycling stations that run on solar power, is a good example of an SME manufacturer that is aggressively leveraging IoT and cloud ERP. In 2017, the company facilitated over 18 million IoT connections through trash and recycling bins equipped with trash compaction and volume sensors that optimize pickup frequency and help prevent overflows.
Using wifi connectivity, sensor data is transmitted to a cloud-based application. Data is processed in real time and made available through desktop dashboards and mobile apps to Bigbelly’s “smart city” and university customers across the U.S., Canada and more than 50 other countries. That enables customers to cost-effectively schedule waste collection while maintaining beautified public spaces.
Bigbelly’s customers also improve workforce productivity, as trash collectors don’t need to empty a bin that may be just one-quarter full. SME manufacturers can capture similar productivity benefits with cloud-supported IoT by having personnel focus on priority jobs highlighted by an intelligent system. That’s important as SME manufacturers continue to struggle to fill key jobs. In fact, 64 percent of respondents to the Oracle NetSuite survey identified skills shortages as the #1 barrier to growth.
Get Started on the IoT Journey
Not sure how to get started with IoT? It’s best to view IoT as a journey. So long as you have a suitable ERP platform in place, start with high-priority, fast-payback initiatives. From there, you can build on successes towards a pervasive IoT ecosystem, and incorporate technologies such as artificial intelligence down the road.
Assess needs and opportunities. An IoT initiative should involve stakeholders from the C-suite to the shop floor. Production managers and grassroots personnel are essential in identifying opportunities to put IoT to work. Map out your environment, including areas in which sensor-based data is generated but not fully utilized. Can you tap into that data quickly for better automation and insights? Identify areas in which incorporating new connected equipment or devices can yield impact.
Outline business objectives. Look to align IoT with your greatest pain points, whether it’s increasing throughput, optimizing warehouse operations or reducing equipment maintenance and downtime. It’s important to outline the business objectives you’re trying to achieve, supported by KPI metrics that reveal effectiveness over time. What data from what systems is needed to reach that goal? What insights do you need to derive from that information, and how do you apply analytics?
Ensure scalability and security. Since IoT is a journey, it pays to start with supporting systems that can scale and flexibly communicate with equipment that uses a variety of protocols and interfaces. That eliminates the need to start from scratch with future IoT projects. Security should also be a priority at the outset, and addressed at both physical and digital layers to reduce risks of tampering and unauthorized data access.
IoT is here, and it’s a golden opportunity for SME manufacturers to level the playing field with larger competitors. Getting started now with an assessment, a roadmap and pilot projects can pay dividends much sooner than you may think.
Gavin Davidson, Product Marketing, Manufacturing and WD for Oracle NetSuite.
