A Starring Role for IoT in Industry 4.0

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“We must deal quickly with the fusion of the online world and the world of industrial production. In Germany, we call it Industrie 4.0.” – Angela Merkel, Chancellor of Germany

Since the concept of Industry 4.0 was unveiled in Germany, it has taken hold rapidly. This movement is rooted in real business benefits. BCG, based on studies in German manufacturing companies, estimated that productivity gains of as much as 60% could be achieved by the implementation of Industry 4.0. Clearly, this has ramifications for controlling costs, increasing revenues, and better utilization of available resources. The big ideas in Industry 4.0 seem to be the concept of smart factories and technologies for factory automation and this is where the role of the Internet of Things takes center stage. Research firm Markets and Markets, in a recent report “Industrial IoT Market by Technology” estimated that the Industrial IoT market would grow at over 8% between 2015 and 2020 and cross $ 150 Billion by then and that the single largest contributor to this market was reported to be the manufacturing sector. So, where is the IoT making Industry 4.0 take off?

Let’s start with the supply chain. Manufacturing has long been attracted to optimization-based concepts like Just-In-Time manufacturing and Lean Manufacturing. The idea is to stock only the minimum required amount of input materials for the shortest possible time and to ship produced goods exactly when they are needed by the customer. There are three parts to this equation:

  •  First – always having transparent visibility into the current stock of the input materials and a clear understanding of what materials will be needed and when. Sensors, RFID tags, and integrated inventory management systems are already providing just this kind of transparency.
  • Then – restocking materials that may have, or maybe on the way to, running low. The Amazon Dash Button shows that IoT is already being used for consumer and B2B auto-replenishment of specific goods and the same applies to ordering for manufacturing as well.
  • Lastly – a clear picture of in-transit materials for more efficient ordering and better planning. The logistics business has already taken to IoT in a big way – GPS-enabled sensors on fleet vehicles, pallets, and even individual elements provide real-time visibility on everything from current position to estimated delivery times.   

Then there is the tale of Smart Manufacturing. Manufacturing has traditionally been at the forefront of automation – this was the first, and still the biggest, field to embrace robotics. Be it smart production systems or cyber-physical production systems – manufacturing is seeing innovative use of IoT-driven technologies in various ways.

  • Creating a Smart Manufacturing environment means building in the real-time impact of several variables in the production plan and reacting to them in the most optimum manner. Variables to be considered could be the fluctuating level of consumer demand, stock availability, machine availability due to occupancy, defects or scheduled outages and intelligently predicting unforeseen delays. Much of this information is being collected with connected devices already.
  • What about the connectedness of the machines? As machines on the shop floor get networked, the entire process of manufacturing gets more integrated and in a sense, also brings together the machines and the manufacturing process. The networked machines can communicate with each other, with the decision-systems, and with those tasked with managing the process to ensure a smooth production flow.
  • This brings us to decision-making. As real-time data becomes available, the real value is in providing software-based solutions with the ability to make decisions based on all the data. This ensures faster decisions, and hence faster action. This promotes more consistent decisions, made when they are needed and intended to ensure that the right business results are achieved. Monitoring these actions is also much easier for those tasked with doing so – as is benchmarking against the desired performance levels. All this adds up to productivity gains, better utilization of resources, and all the good things as per BCG’s report earlier in this piece.

In some ways, this is still an evolving space, given how hard it is to replace manufacturing practices that have been in place for years. That said, though, it’s clear that change is coming. Jamie Hinks of Techradar said, “First things first – this [Industry 4.0] isn’t a new technology. Nor is it a business discipline. It means machines using self-optimization, self-configuration, and even artificial intelligence to complete complex tasks.” Approaching Industry 4.0 as an evolution, rather than as a revolution may be the right way to make that change – and you can count on IoT being the centerpiece of that change.

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