June 26, 2015
This is part 5 of a 5-part blog series examining the strategy and implementation of the Internet of Things in manufacturing.
“The Internet of Things journey is just starting,” states Gartner.
In the report “Four Best Practices to Manage the Strategic Vision for the Internet of Things in Manufacturing” analyst Simon Jacobson writes about the changes that manufacturers will need to make to fully leverage IoT technology—and translate its power into profits.
“This new wave of technology will have challenges spanning strategy, leadership, and governance of technology modernization that have to be systematically overcome for it to deliver results,” he writes. “That value will be generated in manufacturing as available data/information from connected things is used to drive step changes to improve process capabilities and automate decisions, and inextricably blends production with the supply chain, extending manufacturing directly to the end customer.”
According to Accenture, 84% of C-suite executives say their organizations have the capability to create new, service-based income streams using the IoT. Despite this, a mere 7% have developed a comprehensive strategy and committed investments accordingly. Nearly three-quarters (73%) of the C-suite have yet to make any concrete investments in the IoT.
An article by PricewaterhouseCoopers indicates that US manufacturers are slower than those in other countries to adapt the technologies required. The articles says 24% of manufacturers in Asia are investing in sensor technology, 23% are doing so in Latin America, 22% in Africa, 19% in Europe, and 18% in North America.
Computer Business Review offers advice to manufacturers about starting on the IoT journey, saying, “Manufacturers have to be extremely careful when developing their IoT strategy and selecting an IoT technology partner. Asking important questions about security, reliability and customer experience from the beginning is essential in order to avoid potentially disastrous consequences in the future. … To be left behind could be highly costly to a manufacturer at this exciting and revolutionary time for the industry."
Fear of competitors beating them to the market with new IoT strategies and products may be the incentive US manufacturers need to motivate them into action. Action needs to take place soon, and with a well-thought strategy, as McKinsey reports in the recent article “Manufacturing’s Next Act.”
“The traditional manufacturing business model is changing, and new models are emerging; incumbents must be quick to recognize and react to these new competitive challenges. Eighty-four percent of the manufacturing suppliers we surveyed expect new competitors to enter the market soon,” states the McKinsey article.
Accenture echoes the dangers of a wait-and-see strategy, saying, “Survey responses indicate that while executives see the possibilities, for most companies, concrete strategies have yet to emerge. When it comes to the IoT, the data results suggest that most C-suite executives want to follow the trend rather than lead it. In some sectors, that might be a sensible approach. However, various trends point to a future in which the IoT will be an increasingly influential force, including the falling costs of technologies such as sensors, data storage and computing power, as well as the increasingly ubiquitous presence of wireless connectivity. The combination of these technologies, with the disruptive pressures that most respondents already see emerging across the business landscape, means that some companies, while waiting to embrace technological change, will find themselves cornered by competitors entering their markets with new operating models and game-changing services.
The IoT has major potential, but it presents challenges that manufacturers must address as they develop their IoT strategies. Connectivity, cloud storage, automation, and data analysis are factors in the equation that must be mastered before the overarching IoT strategy can be implemented.
The IoT is really a combination of many tactics. Some, such as predictive maintenance, are already in place in many manufacturing plants. It is the connectivity—inside and outside of the plant—and the application of data collected that creates a difference. This is the cornerstone of IoT and the technology that will change the future of manufacturing.
Start planning your strategies now in order to be prepared, or risk being left far behind.
To learn more about the Internet of Things strategy, download “Four Best Practices to Manage the Strategic Vision for the Internet of Things in Manufacturing.”
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Follow this series
Part 1: Internet of Things—defining scope, understanding expectations
Part 2: Manufacturing’s readiness to reap IoT benefits
Part 3: Operations and IT systems must realign for an integrated IoT strategy
Part 4: Estimating the potential benefits of Industrial IoT
Part 5: Getting started on the IoT journey