Take advantage of the Internet of Things. Unleash the Internet of Things. The Internet of Things will change everything. How many times have we heard similar statements? It’s undeniable that IoT in manufacturing and smart manufacturing have become buzzwords in recent years.

According to McKinsey Global Institute, IoT is expected to have a potential economic impact of up to $6.2 trillion annually by 2025, with manufacturing, healthcare and public sector the most affected areas. However, the scope of IoT is so broad that not only will it impose a shift in businesses models and global economy, but it will also have a big impact on our lives and on how we use things. Yet, few people know what its implications are and what benefits its implementation can bring to manufacturing companies. But what do manufacturers really need to find from the vast materials and definitions out there? Essentially two things: why IoT can be beneficial for their businesses and how to implement it.

Imagine a world in which things can communicate with other things. That’s what is referred to as M2M communication. Now imagine a world in which things can communicate with similar devices but they are also inextricably interconnected with their users, with the companies that produced them and with that company’s partners. That’s what we call IoT, still strictly related to M2M, if not its overarching system. At the heart of IoT, indeed, is the complete integration of people, processes and data. Put it simply, physical objects are embedded with sensors, actuators or other data transmission devices that enable people to track, monitor and manage them remotely over the Internet.

Why is IoT so important and what is its role in manufacturing?

Why is IoT forecasted to be such a growth area? Apart from the tangible economic advantages, another reason lies in the lower cost of technology: what allows the Internet of Things to be implemented (cloud services, microchips, software, etc.) are becoming easily accessible and finally affordable to more and more companies. Certainly, this is the right moment for businesses to capture the value of IoT and keep the pace with the speed of technology. It’s no surprise the proliferation of IoT is among the Microsoft Business Predictions for 2015.

What are the benefits that IoT can bring to manufacturing companies? We don’t have to dig deep to understand what the challenges are for the manufacturing sector and what advanced technology and ubiquitous connectivity can do to simplify processes and make manufacturers’ lives easier. This is actually a complex and challenging industry: global supply chains, regulatory compliance and demanding customers’ needs (premium quality, lower costs, elegant design, faster delivery, etc.) require manufacturers to search for new revenue streams and optimise their operations. Therefore, cost, quality and time are the main pains of the industry.

Equipping machines, infrastructures, shipments with sensors and control systems will give manufacturers real-time insights, informing them how their product is produced, sold, shipped and used. Machines will report their status, receive information and ‘act’ accordingly. One of the main advantages will be, therefore, a greater visibility into the manufacturing process, from the product’s conception to its actual usage.

Real-time information flow will allow a rapid and smoother production process, from the MRP and quality management to supply chain management. It will also reduce damage and loss, enabling companies to take immediate corrective action to prevent bottlenecks.

Real-time reporting and remote monitoring will empower businesses, which will easily predict failure or maintenance needs: a complete automation and a better allocation of resources will be possible.

Ubiquitous connectivity will allow manufacturers to nurture closer relationships with their stakeholders and better understand their customers’ needs, driving them towards a customer-focussed offering and servitization. Consequently, company’s responsiveness and agility will increase and maximise productivity and profitability. That’s what we mean by smart manufacturing.

How to implement IoT in manufacturing: where to start

IoT in manufacturing is a topic that cannot be overlooked anymore. The Internet of Things is something that is inevitably coming and is expected to be huge: people are already talking about a fourth industrial revolution, or Industry 4.0, where production processes will be decentralised and all the stakeholders will be inevitably networked. A sharing and collaborative culture will be the key to success.

IoT in manufacturing and its implications can initially be intimidating. However, it doesn’t have to be big. We just need look at IoT as it is: it’s a practical technology that will optimise your manufacturing processes. A business should start ‘small’, using its own infrastructures, cloud services, software and devices.

Look out for future blogs in this series where we will explore how the proliferation of IoT represents a new market opportunity for manufacturers, who are moving into the production of products and components that supply IoT.

Speak to Prodware today about how we help manufacturing businesses to implement the latest technology advancements and cloud services such as Microsoft Azure and Cloud Adjust.