From an industry steeped in legacy but now facing an increasing skills gap and economic crisis, let’s break down why many in the manufacturing industry are wavering on IoT adoption, and the consequences of resisting the rollout of an IoT strategy. The manufacturing industry is in the midst of a digital revolution with baggage from a low-tech era. This digital coming of age, often coined as the Fourth Industrial revolution, is helping manufacturers support remarkable industry demands and evolve to meet customer expectations. But is the manufacturing industry doing what they need to stay ahead?
According to a recent Verizon report, the manufacturing industry saw an 84% boost in IoT network connections between 2016 and 2017. This was more than any other industry surveyed, including Transportation, Energy & Utilities, Smart Cities and Healthcare. Within manufacturing, the benefits have been far-reaching. IoT is impacting the way fleets are managed, products are tracked, and specialized equipment is used.
Ultimately, the adoption of IoT technology into core business operations is growing and though the manufacturing industry also made the highest IoT investment in 2017 ($183 billion), outspending both transportation and utilities industries, the IoT adoption rate for manufacturers is behind schedule. Transforming a legacy industry presents unique challenges to the manufacturing sector, but the opportunities for enterprises that do adopt high-tech solutions are too big to ignore.
Difficulties Of Transforming A Legacy Industry
Several issues are standing in the way of full IoT adoption for manufacturers. One of the greatest barriers to adoption is the manufacturer mindset. Manufacturers often remain too focused on inside the four walls of their plants, where budgets are constrained. This, coupled with long capital cycles, leads to the adoption of simpler, easier to deploy technologies. However, these small projects lack the data and analytics capabilities that IoT solutions provide. The reality is that the manufacturing industry is so much bigger than the inside walls of a plant and companies need to consider the business benefits that come into play outside of the plant when relying on data from IoT sensors to measure priorities like delivery or customer satisfaction.
A major skills gap is emerging in the manufacturing field, where the lack of data scientists and workforce education on IoT solutions hinder widespread roll outs. On one end, there’s a growing need for data scientists who understand how to harness and make actionable the patterns and trends associated with sensor data flows. A Deloitte study recently found that over the next decade, two million manufacturing jobs will go unfilled due to the skills gap. Some of the needed skills include technology and computer, technical, math, and problem-solving competencies, and that list will only grow as the promise of other high-tech solutions like AI and AR become a reality.
And often, business decision makers lack a complete understanding of the IoT to fully embrace the solutions for their companies. Though investment in IoT solutions was high year-over-year, a recent PwC survey found only 30 percent of U.S.-based industrial manufacturing senior executives said that their companies were planning to increase spending on information technology in the subsequent 12 months. Education of IoT benefits is needed at every level for the full benefits of IoT solutions to be realized within manufacturing.
Opportunities For Manufacturers
It’s projected that 20.4 billion “connected things” will be in use worldwide in 2020, according to Gartner. And given the wealth of data the IoT devices supply, this is no surprise. Machines offer up billions of data points each year that can be collected, analyzed and then used to improve productivity and business overall. Across the manufacturing industry already, data from these solutions is being used to increase accountability, visibility, security, and convenience for organizations.
Specifically, IoT sensors are especially crucial for predictive maintenance. By listening to and learning from the billions of data points machines provide, manufacturers can observe and then act on what the data reveals which can help to save time and money on maintenance. Predictive maintenance can also help to forecast risk management, increase machine utilization, and ultimately, stay on track for production.
IoT solutions, with sensors monitoring every aspect of every machine, also allow for visibility into both product quality and delivery accuracy in near-real time, helping to increase customer satisfaction along with providing insight into measuring compliance and operations for each machine. With IoT, data is more readily available than ever and it’s essential that the industry take advantage of it.
Another opportunity lies within increased automation, which will help businesses to improve output. By using production automation, manufacturers can improve the workday of their employees by decreasing hours of heavy labor and the potential risk of injury. In many cases, this can improve output because of the increased consistency of the work through the precision of the machines utilized for these tasks. By increasing automation, workers also have the time and ability to focus on planning, programming, or other tasks that are more analytical and less dangerous leading to an overall better and more productive workplace.
An Increasingly Connected World
The future for IoT in manufacturing and beyond is particularly bright. Innovation in IoT network technologies are continuing to advance, offering faster connections that can handle higher bandwidths of data – all while driving down costs for enterprises. Category M connection modules, for instance, which are utilized in IoT sensors, have dropped in price to a fraction of what they once were. With the increasingly low cost of connectivity, companies can deploy more sensors, collect more data, and better track goods and assets. This new, competitive pricing will help to quickly drive new use cases and options including more secure platforms that will allow further innovation in the manufacturing industry and other enterprises.
Experts also expect the commercialization of 5G, a new, faster commercial cell network, to have a massive impact on the IoT. This new network has the potential to connect billions of machines and devices quickly and efficiently. Ultimately, for manufacturing industries and others, it’s no longer a question of when but of how deeply IoT will transform the future.
About the author
Michael Kotelec is a global practice leader for Verizon Enterprise Solutions with more than two decades of experience in manufacturing. Prior to joining Verizon, he held senior executive positions in general management, commercial, supply chain and operations with AlliedSignal, Honeywell, Sabanci Holdings and Kennametal. Michael received his BA in government and foreign affairs from Hampden-Sydney College and his MBA in international marketing from William and Mary.