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.

While logistics and manufacturing have grown exponentially, problems have become more complicated. A single malfunction can disrupt entire analytics’ systems, disrupting processes along the way. At the same time, machines-to-machine connectivity through the Internet of Things (IoT platform) is increasing the value of data companies have to analyze. Regardless of where you sit to view the logistics industry, problems are becoming more evident. The driver shortage shows no signs of stopping, the cost of connected devices is decreasing and resulting in more immediate work for installation and integration, customers are expecting more, and the average revenue for each shipment is decreasing to keep up with free-shipping offers.

Although these problems seem omnipotent, the IoT will be able to pick up the slack in several fundamental ways.

Global Logistics Will Evolve With the IoT Platform

Twin private-sector and public-sector resources and use of the IoT, the value of the IoT platform grew to more than $8 trillion by 2014, reports the Cisco and DHL publication, the Internet of Things in Logistics. This dramatic growth is being driven by an increase in the level of connection in consumer products, such as smart HVAC systems, connected refrigerators, and smart homes. As demand for connection increases in the private sector, the cost of IoT-enabled devices will decrease. Consequently, the cost of implementing IoT-based solutions in logistics will fall at an even faster rate.

Moreover, the benefits of the IoT platform extend beyond technologically-advanced countries, explains Aankhem Inc.. Emerging markets in the Americas, Asia and Africa will continue to increase their awareness and use of the IoT, which will have a significant impact on how today’s supply chain operates. More legacy-based systems will be phased out for IoT-enabled, advanced resources in the cloud.

Iot platform forecast

Costs and Delays Will Be Driven Down

Delays are the harbinger of increasing costs, which spell doom for the logistics industry. However, the IoT platform is currently responsible for reaching an unprecedented 99.5-percent inventory accuracy, a 30-percent reduction in labor costs, and a 30-percent reduction in the time of order processing asserts Supply Chain 24/7. More importantly, the potential improvements go beyond these statistics. Maintenance is becoming proactive, driving down costs from downtime and reducing the workload on humans. However, this does not even scratch the surface of how many other expenses and delays will be reduced as robots become the next wave of workers.

Disjointed Processes Will Become Connected

Even with today’s level of connection, the logistics industry remains disjointed. Organizational silos exist, and many processes remain based on manual entry of data. This will decrease as these silos crack and become connected through the IoT.

For example, a logistics provider will be able to identify potential problems immediately within a given warehouse before the truck arrives. As a result, workers can be relocated to address shortfalls in picking for urgent shipments, reducing deadhead for truckers. This leads to better-reduced transit times and cost savings for the company. A 10-minute delay could be the factor in making a shipment stuck in gridlock on busy corridors. In another example, a chemical manufacturer has used the IoT platform to empower agile systems to ensure production is maintained even when existing resources dwindle, explains Wouter Aghina, Aaron De Smet, and Kirsten Weerda of McKinsey & Company. In this case, the manufacturer was able to predict potential problems with attaining product, formulate an alternative strategy for obtaining needed raw materials, and ensure output and transit remained stable.

While no evidence exists, having this stability could encourage truckers to continue working instead of looking for other employment due to cut hours. Ultimately, the process of moving products from one area to another to increase efficiency and maintain operations will grow smoother as the IoT matures.

Compliance Will Be Easily Attained and Maintained

Visibility and compliance remain top priorities in the modernity and future of logistics, and pressure from government organizations to increase compliance and visibility will only increase. By empowering rapid data capture and analysis of processes in logistics, which can be directly used to aggregate KPIs for transportation and manufacturing, companies will be able to generate an unparalleled into operations, explains Udaya Shankar of Inbound Logistics. As a result, the risk of violating compliance initiatives will decrease, and companies will be able to invest more into the IoT platform and cloud-based systems.

Safety Concerns Will Drive Further Use of the IoT

Companies that violate Occupational Safety and Health Administration safety mandates face stiff penalties, which grow more stringent by the hour. A quick search of OSHA News Releases reveals more than 10 noted fines and investigations of companies in logistics, and many of these incidents involve processes could have been prevented.

For example, a logistics company in Texas faces up to $58,000 in proposed penalties for violations for not having proper safety management standards in place in March 2016. While we can only assume as to why the company did not maintain the required provisions, the IoT platform could have been used to identify potential problems. Specifically, the IoT could have recognized the need to have a manual shut-off valve in addition to an automatic valve, which brings the discussion of compliance back into view.

The logistics industry functions better now than at any time in history, but in all business, there will always be room for improvement. As the global economy becomes more complex, the need to understand the value of the IoT platform cannot be understated. Fortunately, the answer to many of the existing and potential problems rests in having more knowledge about what is and is not going on in given facilities and during transit. That answer is the IoT.

The Internet of Things (IoT) – a concept almost as loose in definition as the two terms that make it up:  “Internet”, which has come to denote, in whole or in any part, the vast system of electronic communications that now connects nearly every area of human endeavor; and “Things”, which could only be more inclusive if we broadened the term to the Internet of Anything.  Perhaps that is coming.

What is the IoT?

Gartner defines the IoT as “…the network of dedicated physical objects (things) that contain embedded technology to sense or interact with their internal state or external environment. The IoT,” it explains, “comprises an ecosystem that includes things, communication, applications and data analysis.”  McKinsey Global Institute simplifies this a little to say the IoT comprises “sensors and actuators connected by networks to computing systems”.  The International Data Corporation (IDC), meanwhile, identifies each of these sensors and actuators as “a uniquely identifiable device with its own IP address that connects over a network.”

In short, the Internet of Things is, well, all of the things connected to and by the Internet.  The implications, however, are not so simple.  Take, for example, the connected “Smart” office.

internet of things and the cloud

Of course, many of these things have long been connected to the Internet – the phones, the computers, the alarm system.  What is changing is that these things are now also connected to each other through the Internet.  The phone system now ties in with the CRM software, which is now online (SaaS).  The alarm system, lights, window blinds, entry systems and thermostats now communicate with your smartphone, allowing you to control them remotely or allowing them to control each other so that when motion sensors or the keyless entry system detect someone in the building, the A/C kicks on and the lights wake up.  Your printers and HVAC system now tell you when they need maintenance and, in some cases, schedule their own resupplies.  Even your planters have something to say, letting you know when your office plants need water.  

The IoT is connecting the warehouse and retail space as well as the office

The IoT is connecting the warehouse and retail space as well as the office

And this is just in the office.  In the warehouse, the Internet of Things is helping to keep track of inventory, track orders, and identify and schedule maintenance for faulty equipment.  According to McKinsey, this last has been known to reduce maintenance costs by as much as 40% and cut unplanned downtime in half.  On the customer end, devices are making it possible to track customer behavior with almost invasive detail.  The data gathered at point of sale and through apps, in-store monitoring systems, and inventory management devices enable companies to predict buying habits of individual customers and make super-personalized suggestions.  What’s more, they are able to see clearly how a product is being used and even how people are trying but failing to use a product, giving unprecedented insight into how to make products better fit customer expectations.  

Experts in every industry are noting the difference this makes in product development.  They’re all saying it – a product is no longer just a product.  As more and more Things get connected, products are becoming services.  Where a thermostat used to be something you bought at the hardware store and used until it stopped working, today’s thermostat comes with software, and with the software a support team.  Things that used to get outdated regularly can now be upgraded with a simple software update.  

In the next few years, customers will come to expect some level of connectivity in almost everything they buy, whether it be the ability to scan a food item for nutritional information or a function that allows their running shoes to send them a notification when it’s time to get a new pair.  Businesses will have to jump on this bandwagon from both sides – equipping their products with the connected services customers will come to expect and outfitting their offices, stores, and warehouses with the connected equipment that will help them keep up.

Challenge Areas

There are a few key areas of concern that seem always to come up whenever we talk about the onward rush of the Internet of Things.

Blue-Lock-IconSecurity

More connected devices inevitably results in what is referred to as an increased “attack surface”.  Where before, a hacker had a only few of entry to access your company network, the connectedness of things poorly managed could mean that they can now gain access through your potted plant or your vending machine.  

 

Blue-Eye-IconPrivacy

While privacy and security generally have a close relationship, in the case of the IoT, the concern seems less to be about the security of private information gathered by connected devices, but the gathering of that information to begin with.  Suddenly, an office can monitor the work (and other) habits of the staff.  Apps track every move a customer makes in a store.  The potential for devices and sensors to gather data is almost endless and some folks are not so comfortable with this.

 

Blue-Graph-IconData Storage and Analysis

For those who are comfortable with the gathering of these masses of data, there arise the conjoined twin problems of where and how to store it and how to analyze it.  After all, what better way to help folks get comfortable with the collection of personal data than to show them how it is being used to enhance their personal experience.   

 

Blue-Gears-IconInteroperability

As it stands, there are already hundreds and thousands of devices, sensors, gizmos, gadgets, and thingamajigs that connect to the Internet.  Unfortunately, almost every one of them currently requires its own app or other software.  This is manageable up to a point, but opening 7 different apps just to shut down the office for the day gets tiresome and quickly starts to negate any added efficiency being connected may have afforded.  As the Internet of Things starts to become just “things”, we will need to find ways to plug these things in to a dashboard of some kind that will make it easier for us to control them and enable them to interact optimally.

 

Blue-Power Lines-IconEnergy and Bandwidth Needs

We are already seeing how a world of connected devices is affecting our connectivity and energy needs.  From coffee shops to airplanes, amendments to include outlets at every seat and Wi-Fi everywhere are becoming commonplace.  Datacenters are already consuming enough energy to power a large city.  The question then arises – as all the “Things” get plugged in and hooked up, how will energy and bandwidth requirements be affected, on both the wide and individual scale?

 

Blue-Risk Triangle-IconOutages

If your entire office functions on connected devices, what happens when you lose power or – heaven forbid – Internet service?  Cut lines, bad weather, provider outages – how do you protect a connected business when so much of it depends on things outside your control?

 

Blue-Robot-IconA.I. Armageddon and a Robot-Controlled Dystopian Future

We’d like to say “nobody’s saying it but everybody’s thinking it” and then laugh it off.  But the truth is, people are saying it, and they’re pretty serious.  As we give up more and more control of the basic functions of our daily lives to software and computer-controlled devices, how do we know when it becomes too much?  Where do we draw the line between automated efficiency and the kind of lazy complacency that stifles creativity and mires innovation?  

How the Cloud Makes the IoT Manageable

Security and Privacy

Big cloud service providers are already thinking about how to bring the Internet of Things together on an enterprise scale.  IBM, Microsoft, Amazon, and Samsung (they’re obsessed with the IoT) have all developed platforms to help businesses manage their Things.  This allows your business to create a single point of access, reducing their attack surface.  Moreover, because these companies are in the business of data, their efforts to keep that data secure will always be cutting edge.   

A centralized platform also means greater control.  While the cloud may not discourage the collection of private data, it can make it much easier to control who has access to it, how it is used, and how securely it is stored.

Data Storage and Analysis

The number of connected devices  has grown from a few thousand beginning in the 1980s (think ATMs and pay-at-the pump) to an expected 25 billion by 2020.  Most of these devices can be used to gather data that can be useful in making a business run more efficiently.

Currently, most IoT data are not used. For example, on an oil rig that has 30,000 sensors, only 1 percent of the data are examined. That’s because this information is used mostly to detect and control anomalies—not for optimization and prediction, which provide the greatest value. McKinsey

The amount of data made available by the Internet of Things is unprecedented.  For companies to take advantage, they need a lot of space to store it and a lot of power to process it.  Cloud storage provides a reliable, secure, and expandable option for the former while SaaS offerings continue to provide more and more options for processing and analysis.  This ability to actually use information being gathered has implications for almost every other area of IoT concern.

Interoperability

IoT signalsThere are a dozen ways for various devices to connect to the Internet and each other:  2G/3G/4G, NFC, WiFi, ZigBee, Bluetooth, WSAN, Z-Wave, good old fashioned wires.  They are even developing technology (called LiFi) that uses light waves to transmit information.  Unfortunately, most devices operate on a single channel, preventing them from interacting in ways that could be useful.  The information they transmit comes to rest in a single-device app, and there is where the usefulness ends.  

To deal with the first problem, the tech world has started to develop hubs (we know, yet another Thing) that are able to communicate through multiple channels and collect signals from a wide variety of devices, directing those communications through a single app.  As these technologies become increasingly sophisticated, they will become more and more adaptable and can be made to interface with custom software designed to help make those communications more useful.

Energy and Bandwidth

The ability to monitor precisely the amount of energy and bandwidth actually being used helps to identify areas where there may be waste and eliminate them.  The reality is, most IoT devices use very little bandwidth to operate, if any.  It is transmitting the data they gather that may require a bump in your connection.  Uniting devices on a cloud platform allows you to reduce redundancies in data transmission, which may help to keep this under control.  

On the energy side, though the cloud may not help you get around the need for more outlets, it can eliminate the need for more servers, one of the largest consumers of energy in an office.  The datacenters that make the cloud possible are, admittedly, huge consumers of power, but they also have huge resources at their disposal to make the generation of that power cleaner and its use more efficient.  This reduces the environmental impact and the cost of the energy needed to power your Things.

Outages

Knowing exactly what you need can help you predict exactly what back-up you need – what kind of battery or generator power, how much bandwidth to avoid maxing out. Centralized analysis can help you do that.  What’s more, the cloud allows you to be flexible, which means that, even if the power at your office goes out, workers can keep working from other locations and still have access to the entire business.  Even a total loss at your physical office leaves your data and operating systems secure and functional.   

Robot Armageddon

Monitoring and processing data allows you to easily see where automation has actually improved efficiency and where human hands and minds are needed to push processes forward and create more innovative approaches.  Centralized control puts the technology in your hands, at your disposal, making it the useful tool it is meant to be.  While we can’t claim that the cloud can keep computers from getting too smart, the clear picture it can provide of the landscape of our technology may keep us from feeling like we need an A.I. smarter than us to keep it all up and running. And if not, at least it could reduce the number of plugs we need to pull when it all goes to hell.

Robot icon by Simon Child, from The Noun Project, all other icons from pixabay.com

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