The Industrial Internet of Things (IIoT) has been a major topic among manufacturers and third-party logistics providers (3PLs) for several years. However, the IIoT is beginning to encroach on all aspect of manufacturing and supply chain management for its wide-ranging deployment and application to improving processes. In addition, the IIoT’s nature allows companies to reduce overhead and maximize efficiency without dramatically increasing initial investments. But, some companies have avoided this trend. Over 2017, this will become an impossibility as the IIoT by manufacturers moves closer to every aspect of the economy and business operations, and you know why.

1. The IIoT by Manufacturers Is Extremely Valuable.

Business has a way of moving toward technologies with the greatest value. According to Louis Columbus of Forbes magazine, the IIoT is estimated to unlock manufacturing savings more than $11 trillion by 2025 globally, boosting overall economic value by 33 percent. In the U.S., the IIoT’s value could easily surpass $3.7 trillion by 2025 as well. Meanwhile, the use of the IIoT by manufacturers will continue to transform business as its data-processing powers grow and provide unparalleled views and insights into how businesses, particularly manufacturers, can realize greater cost savings. So, how exactly does the IIoT achieve such savings?

2. Predictive Maintenance and Customer Marketing Analytics Will Cut Manufacturers’ Primary Costs.

Much of manufacturing overhead derives from costs associated with equipment repair and replacement and marketing to consumers. However, the IIoT can be leveraged to generate advanced predictive maintenance schedules, including rerouting of processes to equipment during times of repair, to maximize the life expectancy of each item. As explained by Shane Laros of Engineering.com, the IIoT, or Industry 4.0, put the power of maintenance into the hands of machine learning.

Parts can automatically detect their imminent failure, spurring workers to correct issues before they cause system-wide delays. Meanwhile, digital monitoring of equipment boosts operational efficiency by isolating potential problems and areas that increase a company’s costs.

For example, if a piece of equipment is using more electricity than other equipment of the same type, it may indicate a problem with its electrical wiring. Consequently, the information can be relayed to an appropriate party to correct the issue before it shorts out.

Concerning marketing benefits, the IIoT connects information generated by consumers through social media, point-of-sale systems, internet trends and beyond to manufacturers directly. As a result, companies can predict and respond to changes in the market with greater accuracy and precision. Although this is commonly compared to the usefulness of the basic Internet of Things (IoT), its connection to manufacturing begets the IIoT title. Essentially, the IIoT by manufacturers will serve to keep product costs down by cutting the costs associated with each item’s manufacture.

3. The IIoT Meets Demand for Increased Visibility.

Modern manufacturers have plenty to worry about, and visibility is often at the top of this list. As companies grow, the level of visibility is also directly related to the companies’ level of connectedness in its respective supply chain, reports Chad DeJong of Industry Week. The IIoT by manufacturers enables broad-scale implementation and visibility to companies expanding in size or changing business models. Since traditional, internal software systems cannot handle such increase in operation, the IIoT is the natural solution.

4. IIoT Deployment Provides Significant ROI.

Manufacturers are expected to invest more than $70 billion into the IIoT by 2020, reports John Greenough of Business insider. The following graphic details how this investment has increased since 2014.

iiot by manufacturers

Based solely on the increased investment rates, the use of the IIoT by manufacturers will become more important in the coming years. More manufacturers will leverage its capacity and analytics to bring costs to record lows and eliminate redundancy and inefficiency wherever possible.

The speed of realizing a positive ROI for implementing IIoT technologies is difficult to define in terms of averages. Some companies with extreme, inefficient overhead costs will realize returns earlier. Meanwhile, companies looking to cut minor inefficiencies and boost overall revenue may require months to achieve similar returns. Ultimately, the size of the company and the dedication in deployment determines the time to return.

5. Fear Is No Longer a Major Factor.

One of the main reasons companies have avoided the IIoT is fear of a cyber-attack. Who can forget the numerous attacks that have rocked national companies in recent years? In 2016, the largest cyber-attack in history took place, affecting DynDNS, impacting domain name servers (DNSs) and shutting many sites down for an extended period. In response to looming cyber security threats, more companies involved in the manufacture, distribution, and sale of IIoT-based products have increased cybersecurity spending by 23.7 percent since 2015.

In addition, overall spending to increase cybersecurity among the IIoT will increase in speed after 2020, reports Gartner. In fact, some experts suggest that up to 25 percent of all cyber-attacks will focus on IoT-based technologies after 2020, Therefore, the need for increased spending to prevent them will rise. In turn, the level of cyber security deployed in your company’s IIoT initiatives will increase as well.

The Big Picture.

There is no longer a logical argument against using the power of the IIoT in manufacturing and supply chains. Rather than waiting for your company to fall behind your competitors, you need to embrace the IIoT now. It is a reality, not science-fiction.

Manufacturers are set to invest up to $70 billion in the Industrial Internet of Things (IIoT) by 2020, reports John Greenough of Business Insider. However, actual investments could easily exceed these expectations. The development and deployment of autonomous vehicles, machine-to-machine communication abilities and preventative maintenance could all team up to result in even greater savings in 2016, which will further increase investments for the Industrial Internet of Things.

industrial internet of things in manufacturing graph

While leading manufacturers continue to review the scope and potential benefits of the Industrial Internet of Things the majority asserts Megan Crouse of Manufacturing.net, continue to debate the effectiveness and capacity to implement IIoT solutions in today’s manufacturing processes. However, the Industrial Internet of Things will continue to be applied in profound, productivity-conducive ways in 2016 and beyond, and manufacturers need only look at where the IIoT was believed to be recently and where experts it to go in the next decade.

Previous Applications of the Industrial Internet of Things in Manufacturing

4 Industries which will gain the most from industrial internet of thingsIn a 2012 survey by Forrester and Zebra Consulting, reports Cigniti Technologies, only 15 percent of manufacturers had implemented at least one Industrial Internet of Things solution. However, this mindset has changed. Previous applications of the IIoT in manufacturing have led to a savings of 12 percent across the industry. Additionally, overall maintenance costs have dropped by 30 percent, and predictive maintenance has reduced machine-specific failures by 70 percent, reports Louis Columbus of Forbes magazine. Since 2012, the overwhelming majority of manufacturers (63 percent) have either already implemented or are planning to implement IIoT technologies soon, but only 10 percent have already successfully built and integrated IIoT networks into the supply chain as January 31, 2016.

 

Growth of the Industrial Internet of Things Continues

76 percent of manufacturers expect to launch Industrial Internet of Things applications and use of smart devices by the end of 2017. Growth of the IIoT will likely play out in four phases, reports Accenture Consulting. These phases include the following:

industrial internet of things phases for manufacturing

IIoT’s Greatest Impacts on Manufacturing

Further, Columbus goes on to state that Shipping, Logistics, and something near and dear to our heart as a transportation management solutions provider, transportation, have a great opportunity to gain efficiency for manufacturing by applying the Industrial Internet of Things, according to figure 3 below. Transportation costs are considerable for many manufacturers, and leveraging technology to make transportation more efficient, helps reduce overall costs.  27 percent of those expect the most significant changes from the Industrial Internet of Things will revolve around shipping, logistics, and transportation processes. Warehousing will follow these processes, and value-added services will continue to make up the lower half of the following graphic.

 

industrial internet of things use(Source Forbes Magazine)

Additionally, 76 percent of manufacturers expect the IIoT’s biggest opportunity to focus customer satisfaction rates, and greater productivity and higher product-quality will follow suit. However, the use of the IIoT is expected to be primarily used in smart commercial buildings, such as smart factors, reports Dick Weisinger

Future of IIoT Applications in Manufacturing

Manufacturing will be the most affected by the Industrial Internet of Things, notes Cigniti Technologies. In fact, the manufacturing sector will gain $3.9 trillion due to use and implementation of the IIoT, and the IIoT will impact the supply chain in the following ways:

Most Importantly, the IIoT will enable efficient management of the entire supply chain.

Today’s manufacturing improvements represent a fraction of how the Industrial Internet of Things will transform the industry in 2016, and manufacturers are taking notice. The global trend towards connectivity is only going to grow stronger, and manufacturers must be willing to make the investments needed in order to thrive in the coming age of autonomous, connected manufacturing. After all, the best-laid plans for manufacturers lack merit and will fail if the manufacturer avoids implementation of the Industrial Internet of Things.

As manufacturing, transportation, and every aspect of humanity evolves in modernity, reliance upon the Internet of Things (IoT) continues to grow and impact every facet of civilization. Another term, as it more relates to manufacturing, distribution, transportation, and logistics that has also been thrown around is the Industrial Internet of Things (IIoT). ThomasNet wrote an article, “Are Manufacturers Ready for the Industrial Internet?” and states:

Manufacturers’ business models and competencies will have to evolve to take advantage of the Industrial Internet. The rewards promise to offer tremendous value to those companies that can adapt and produce machinery and equipment for it.

However, this represents a frightening, yet exciting and profitable, prospect: how will transportation management services, warehouse management systems, and other aspects of third-party logistics (3PL) benefit themselves by using the industrial internet of things in the future? Rather than leave you to your imagination for how this will work, let us take you on a journey into the world of tomorrow, where the IIoT rests within the heart and soul of every 3PL service.

Creation of Smart Containers

industrial internet of things supply chain logisticsSmart containers will have Radio Frequency Identification (RFID) sensors that improve the transparency and accuracy with which a product is transported. In the past, identification of shipping container materials relied on human input to answer any questions about a given product, which includes what, how many, why, where an item needs to go. Furthermore, shipping containers may or may not be susceptible to damage from the elements; therefore, merchandise would arrive in poor condition, and a return on investment would be lost.

Using the Industrial Internet of Things, RFID sensors will provide a detailed account of all items within any given container and identify times when the environmental conditions of a given container pose a threat to the products. For example, sensitive equipment may be damaged by dramatic changes in atmospheric pressure. The sensor will provide an alert to drivers or other employees working within the shipping company. However, the IIoT will progress to a point where human action for addressing potential problems. The Industrial Internet of Things will have the ability to recall or redirect a vehicle, and computerized loading equipment can select the appropriate shipments for removal and redirection. In another scenario, the IIoT can ensure any such sensitive items are placed within an “indestructible” shipping container, which would eliminate the need for concern over environmental concerns. However, the end result of any logistics system is to improve efficiency and drive customer satisfaction through rapid, reliable service.

Smart Vehicles

Most think of trucks as the primary means of transportation; however, the IoT’s impact on shipping includes planes, trains, ocean-carriers, and the eventual use of drones. Smart vehicles gather data and determine which, if any, factors affect a given product’s shipping path. For example, all US vehicles manufactured after 2004 require the installation of a Tire Pressure Monitoring System. Since low tire pressure results in poor gas mileage, the parent company incurs an additional cost of shipping. The use of multiple monitoring systems in vehicles, or other means of transportation, reduces the chances of vehicle problems impacting services.

Tomorrow, the Industrial Internet of Things will use this information to identify potential problems before they exacerbate into a shipping failure or delay. Furthermore, the IIoT will identify periods of inefficiency during transport and make recommendations for future transports. The IIoT will also reach into another key aspect of shipping, infrastructure.

The Industrial Internet of Things and Infrastructure

America boasts one of the greatest infrastructures in the world, and America’s roads are no exception. However, the most up-to-date 3PL services still have to worry about the actions of other people, such as drivers on roads, throughout the course of business. The IIoT can be seen today in the use of advanced safety technologies in newer vehicles, such as the ability to detect problems. Tomorrow’s IIoT will detect erratic behavior of other drivers and produce an alert to other drivers. The Industrial Internet of Things will grow to alert local police departments of potential problems of other drivers, and eventually, IIoT technologies within the roads will disable these dangerous vehicles. In another futuristic scene, the IIoT will shut-down lanes or redirect traffic towards a safer, alternative path. Imagine a time when the road identifies approaching dangerous conditions miles before coming onto the scene of an accident. (Maybe this will decrease regulations which drive up shipping rates.)

Increasing Security and Responsiveness

In close relation to alerting authorities about erratic drivers, the IIoT will have the ability to reduce shrink associated with unexpected opening of shipping containers. Furthermore, the Industrial Internet of Things will identify which items have been moved inappropriately, such as when a corrupt worker tries to steal merchandise. As a result, the IIoT may lock a driver out of the vehicle, alert authorities, or even initiate other security protocols, including an electronically controlled door lock.

Although some argue the Industrial Internet of Things and IoT, in general, will invade privacy and reduce employee satisfaction, it serves as a means of increasing 3PL provider efficiency by reducing human error and extraneous factors. Whether it’s avoiding poor weather conditions, determining alternative routes, or increasing company responsiveness to problems, the Industrial Internet of Things will make the world a happier, safer place. Today, we track things. Tomorrow, we rest while the IIoT maximizes vertical integration of systems and prevents problems before they occur.

How do you think the Industrial Internet of Things will change the supply chain and logistics as well as the services provided by 3PLs? Let us know in the comments below!

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