“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 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 when. Sensors, RFID tags, and integrated inventory management systems are already providing just this kind of transparency.
- Then – restocking materials that may have, or may be 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 take 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-optimisation, 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 center piece of that change.
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