IIoT in Manufacturing: Are We There Yet?

  • October 08, 2015
  • Infor
  • Feature

By Andrew Kinder, Infor

A concept invented in the late 1990s by a British manufacturing visionary, it seems that the (Industrial) Internet of Things (IIoT) is finally set to revolutionise the factory floor.  Research firm IDC estimates that by 2020, 40% of all data will be machine-generated, with 20 to 50 billion devices fuelling that growth.  And a recent survey commissioned by Infor revealed that more than half (52%) of manufacturers globally see IoT as a business priority, with one in twenty claiming that it is the biggest priority.  

While just 8% of those polled have an established IoT programme in place, over a third (38%) claimed they were in the early stages of investigating the potential of IoT, with 12% planning a tangible IoT project in the next 12 months.  Just 7% claimed to have pilots underway right now and a third (35%) said they have no current plans to use IoT in their business. 

A new era?

Yet despite the hype around IIoT, the concept of machines generating data and sharing it with other machines is nothing new.  Manufacturers, utilities companies, oil refineries and other equipment-intensive industries have been using connected devices to monitor their operations for more than 20 years – whether it is smart sensors reporting changes in temperature, or vehicle tracking systems to support logistics.  But while a universal definition of IoT has yet to be agreed upon, what is clear is that its value has evolved, becoming greater as a result of new supporting technologies and frameworks.   

In our experience IoT projects in 2015 vary immensely.  While we have an abundance of customers using our Enterprise Asset Management (EAM) application, embracing sensors in conjunction with software to proactively monitor, manage and maintain their equipment’s health and performance, the majority of IIoT projects are still very much in their infancy, consisting of focus groups and pilots.  Away from equipment maintenance, one manufacturer we talked to in the meat processing industry recently, told us they are looking at numerous possibilities for IoT in order to increase yield and reduce waste, one of which involves sensors tracking the health of livestock prior to slaughter – a really interesting application.  

A pathway to proactivity

IIoT is an approach which presents an enormous opportunity for manufacturers and other equipment-intensive organisations. McKinsey predicts that the global economic value for the Internet of Things will reach $11 Trillion by 2020.  Through collecting, analysing and processing sensor-generated data, companies can gain the kind of comprehensive, detailed insights which can drive down costs, or be wrapped up as customer offerings and new services, opening up new avenues of profitability and growth.  Essentially it is less of a technology, more an approach to becoming more insightful, proactive and agile in all areas of the business.   

In fact two thirds (65%) of global manufacturers polled in the Infor survey pointed to cost savings from greater operational efficiencies as the primary benefit of IoT, with 35% saying they viewed revenue growth from new products and services as the biggest advantage.  Productivity topped the specific business benefits cited, followed by better insight and decision-making; greater utilisation of equipment and machinery; visibility and traceability across the supply chain; and new revenue streams. 

But for any of these opportunities to be seized, sensors alone are insufficient.  Manufacturers need a combination of real-time (sensor-generated) data combined with Cloud storage and powerful analytics.  Only then can they perform fast, intelligent business decisions which will drive the kind of insightful, proactive, agile culture needed to boost profitability and expedite global competitiveness.

This means that contrary to the hype, the key to seeing the true benefits of IIoT resides not in the sensors, but in the complete visibility and integration of the IIoT-generated data with other core business systems.  

ERP is integral to the success of IIoT as it brings together sensor-generated data with EAM, PLM, CRM databases and unstructured data from across the business.  Only through this level of integration, interpretation and contextualisation can cost savings be maximised, and value propositions be created and monetised.

For many, this means the current ERP system must be reviewed, and often replaced or upgraded in  order to capitalise on this new opportunity.   Any system implemented more than five years ago is unlikely to contain the level of flexible architecture, integration capabilities, social collaboration and intuitive user interfaces necessary to complete the advanced tasks in hand. 

To make this process even more challenging, it seems that organizations are unclear about best practices and even who should be the person driving action.  IIoT lacks a consistent owner within businesses.  While a quarter of manufacturers (24%) identified the IT function as a primary driver of IIoT, nine functions in total were cited as the primary drivers of initiatives.  Other challenges included a lack of skillsets; unclear benefits; cost; lack of business demand; lack of strategy; and technical infrastructure.

A winning combination    

IIoT connects people, processes, data and things in an intelligent way to enable new business models and make better decisions.  But the strategy needs to be driven from the top, plugged into powerful analytics and underpinned by flexible, real-time and intelligent ERP if it is to deliver on its promises.

IIoT is not something that can be bought off the shelf per se, and any vendor who claims this should be treated with caution.  IIoT is an opportunity to embrace a range of new technologies to innovate and drive greater insight, proactivity and agility for manufacturers.  And it is this combination which stands to help consolidate the UK’s position as one of the leading manufacturing nations in the world.    



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