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Posts from the ‘Indutstrial Internet of Things’ Category

Seven Things You Need To Know About IIoT In Manufacturing

  • Global spending on IIoT Platforms for Manufacturing is predicted to grow from $1.67B in 2018 to $12.44B in 2024, attaining a 40% compound annual growth rate (CAGR) in seven years.
  • IIoT platforms are beginning to replace MES and related applications, including production maintenance, quality, and inventory management, which are a mix of Information Technology (IT) and Operations Technology (OT) technologies.
  • Connected IoT technologies are enabling a new era of smart, connected products that often expand on the long-proven platforms of everyday products. Capgemini estimates that the size of the connected products market will be $519B to $685B by 2020.

These and many other fascinating insights are from IoT Analytics’ study, IIoT Platforms For Manufacturing 2019 – 2024 (155 pp., PDF, client access reqd). IoT Analytics is a leading provider of market insights for the Internet of Things (IoT), M2M, and Industry 4.0. They specialize in providing insights on IoT markets and companies, focused market reports on specific IoT segments and Go-to-Market services for emerging IoT companies. The study’s methodology includes interviews with twenty of the leading IoT platform providers, executive-level IoT experts, and IIoT end users. For additional details on the methodology, please see pages 136 and 137 of the report. IoT Analytics defines the Industrial loT (lloT) as heavy industries including manufacturing, energy, oil and gas, and agriculture in which industrial assets are connected to the internet.

The seven things you need to know about IIoT in manufacturing include the following:

  • IoT Analytics’ technology architecture of the Internet of Things reflects the proliferation of new products, software and services, and the practical needs manufacturers have for proven integration to make the Industrial Internet of Things (IIoT) work. IoT technology architectures are in their nascent phase, showing signs of potential in solving many of manufacturing’s most challenging problems. IoT Analytics’ technology architecture shown below is designed to scale in response to the diverse development across the industry landscape with a modular, standardized approach.

  • IIoT platforms are beginning to replace MES and related applications, including production maintenance, quality, and inventory management, which are a mix of Information Technology (IT) and Operations Technology (OT) technologies. IoT Analytics is seeing IIoT platforms begin to replace existing industrial software systems that had been created to bridge the IT and OT gaps in manufacturing environments. Their research teams are finding that IIoT Platforms are an adjacent technology to these typical industrial software solutions but are now starting to replace some of them in smart connected factory settings. The following graphic explains how IoT Analytics sees the IIoT influence across the broader industrial landscape:

  • Global spending on IIoT Platforms for Manufacturing is predicted to grow from $1.67B in 2018 to $12.44B in 2024, attaining a 40% compound annual growth rate (CAGR) in seven years. IoT Analytics is finding that manufacturing is the largest IoT platform industry segment and will continue to be one of the primary growth catalysts of the market through 2024. For purposes of their analysis, IoT Analytics defines manufacturing as standardized production environments including factories, workshops, in addition to custom production worksites such as mines, offshore oil gas, and construction sites. The lloT platforms for manufacturing segment have experienced growth in the traditionally large manufacturing-base countries such as Japan and China. IoT Analytics relies on econometric modeling to create their forecasts.

  • In 2018, the industrial loT platforms market for manufacturing had an approximate 60%/40% split for within factories/outside factories respectively. IoT Analytics predicts this split is expected to remain mostly unchanged for 2019 and by 2024 within factories will achieve slight gains by a few percentage points. The within factories type (of lloT Platforms for Manufacturing) is estimated to grow from a $1B market in 2018 to a $1.5B market by 2019 driven by an ever-increasing amount of automation (e.g., robots on the factory floor) being introduced to factory settings for increased efficiencies, while the outside factories type is forecast to grow from $665M in 2018 to become a $960M market by 2019.

  • Discrete manufacturing is predicted to be the largest percentage of Industrial IoT platform spending for 2019, growing at a CAGR of 46% from 2018. Discrete manufacturing will outpace batch and process manufacturing, becoming 53% of all IIoT platform spending this year. IoT Analytics sees discrete manufacturers pursuing make-to-stock, make-to-order, and assemble-to-order production strategies that require sophisticated planning, scheduling, and tracking capabilities to improve operations and profitability. The greater the production complexity in discrete manufacturing, the more valuable data becomes. Discrete manufacturing is one of the most data-prolific industries there are, making it an ideal catalyst for IIoT platform’s continual growth.

  • Manufacturers are most relying on IIoT platforms for general process optimization (43.1%), general dashboards & visualization (41.1%) and condition monitoring (32.7%). Batch, discrete, and process manufacturers are prioritizing other use cases such as predictive maintenance, asset tracking, and energy management as all three areas make direct contributions to improving shop floor productivity. Discrete manufacturers are always looking to free up extra time in production schedules so that they can offer short-notice production runs to their customers. Combining IIoT platform use cases to uncover process and workflow inefficiencies so more short-notice production runs can be sold is driving Proof of Concepts (PoC) today in North American manufacturing.

  • IIoT platform early adopters prioritize security as the most important feature, ahead of scalability and usability. Identity and Access Management, multifactor-factor authentication, consistency of security patch updates, and the ability to scale and protect every threat surface across an IIoT network are high priorities for IIoT platform adopters today. Scale and usability are the second and third priorities. The following graphic compares IIoT platform manufacturers’ most important needs:

For more information on the insights presented here, check out IoT Analytics’ report: IIoT Platforms For Manufacturing 2019 – 2024.

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Industry 4.0’s Potential Needs To Be Proven On The Shop Floor

  • 99% of mid-market manufacturing executives are familiar with Industry 4.0, yet only 5% are currently implementing or have implemented an Industry 4.0 strategy.
  • Investing in upgrading existing machinery, replacing fully depreciated machines with next-generation smart, connected production equipment, and adopting real-time monitoring including Manufacturing Execution Systems (MES) are manufacturers’ top three priorities based on interviews with them.
  • Mid-market manufacturers getting the most value out of Industry 4.0 excel at orchestrating a variety of technologies to find new ways to excel at product quality, improve shop floor productivity, meet delivery dates, and control costs.
  • Real-time monitoring is gaining momentum to improve order cycle times, troubleshoot quality problems, improve schedule accuracy, and support track-and-trace.

These and many other fascinating insights are from Industry 4.0: Defining How Mid-Market Manufacturers Derive and Deliver ValueBDO is a leading provider of assurance, tax, and financial advisory services and is providing the report available for download here (PDF, 36 pp., no opt-in). The survey was conducted by Market Measurement, Inc., an independent market research consulting firm. The survey included 230 executives at U.S. manufacturing companies with annual revenues between $200M and $3B and was conducted in November and December of 2018. Please see page 2 of the study for additional details regarding the methodology. One of the most valuable findings of the study is that mid-market manufacturers need more evidence of Industry 4.0, delivering improved supply chain performance, quality, and shop floor productivity.

Insights from the Shop Floor: Machine Upgrades, Smart Machines, Real-Time Monitoring & MES Lead Investment Plans

In the many conversations I’ve had with mid-tier manufacturers located in North America this year, I’ve learned the following:

  • Their top investment priorities are upgrading existing machinery, replacing fully depreciated machines with next-generation smart, connected production equipment, and adopting real-time monitoring including Manufacturing Execution Systems (MES).
  • Manufacturers growing 10% or more this year over 2018 excel at integrating technologies that improve scheduling to enable more short-notice production runs, reduce order cycle times, and improve supplier quality.

Key Takeaways from BDO’s Industry 4.0 Study

  • Manufacturers are most motivated to evaluate Industry 4.0 technologies based on the potential for growth and business model diversification they offer. Building a business case for any new system or technology that delivers revenue, even during a pilot, is getting the highest priority by manufacturers today. Based on my interviews with manufacturers, I found they were 1.7 times more likely to invest in machine upgrades and smart machines versus spending more on marketing. Manufacturers are very interested in any new technology that enables them to accept short-notice production runs from customers, excel at higher quality standards, improve time-to-market, all the while having better cost visibility and control. All those factors are inherent in the top three goals of business model diversification, improved operational efficiencies, and increased market penetration.

  • For Industry 4.0 technologies to gain more adoption, more use cases are needed to explain how traditional product sales, aftermarket sales, and product-as-a-service benefit from these new technologies. Manufacturers know the ROI of investing in a machinery upgrade, buying a smart, connected machine, or integrating real-time monitoring across their shop floors. What they’re struggling with is how Industry 4.0 makes traditional product sales improve. 84% of upper mid-market manufacturers are generating revenue using Information-as-a-Service today compared to 67% of middle market manufacturers overall.

  • Manufacturers who get the most value out of their Industry 4.0 investments begin with a customer-centric blueprint first, integrating diverse technologies to deliver excellent customer experiences. Manufacturers growing 10% a year or more are relying on roadmaps to guide their technology buying decisions. These roadmaps are focused on how to reduce scrap, improve order cycle times, streamline supplier integration while improving inbound quality levels, and provide real-time order updates to customers. BDOs’ survey results reflect what I’m hearing from manufacturers. They’re more focused than ever before on having an integrated engagement strategy combined with greater flexibility in responding to unique and often urgent production runs.

  • Industry 4.0’s potential to improve supply chains needs greater focus if mid-tier manufacturers are going to adopt the framework fully. Manufacturing executives most often equate Industry 4.0 with shop floor productivity improvements while the greatest gains are waiting in their supply chains. The BDO study found that manufacturers are divided on the metrics they rely on to evaluate their supply chains. Upper middle market manufacturers are aiming to speed up customer order cycle times and are less focused on getting their total delivered costs down. Lower mid-market manufacturers say reducing inventory turnover is their biggest priority. Overall, strengthening customer service increases in importance with the size of the organization.

  • By enabling integration between engineering, supply chain management, Manufacturing Execution Systems (MES) and CRM systems, more manufacturers are achieving product configuration strategies at scale. A key growth strategy for many manufacturers is to scale beyond the limitations of their longstanding Make-to-Stock production strategies. By integrating engineering, supply chains, MES, and CRM, manufacturers can offer more flexibility to their customers while expanding their product strategies to include Configure-to-Order, Make-to-Order, and for highly customized products, Engineer-to-Order. The more Industry 4.0 can be shown to enable design-to-manufacturing at scale, the more it will resonate with senior executives in mid-tier manufacturing.

  • Manufacturers are more likely than ever before to accept cloud-based platforms and systems that help them achieve their business strategies faster and more completely, with analytics being in the early stages of adoption. Manufacturing CEOs and their teams are most concerned about how quickly new applications and platforms can position their businesses for more growth. Whether a given application or platform is cloud-based often becomes secondary to the speed and time-to-market constraints every manufacturing business faces. The fastest-growing mid-tier manufacturers are putting greater effort and intensity into mastering analytics across every area of their business too. BDO found that Artificial Intelligence (AI) leads all other technologies in planned use.

IoT Market Predicted To Double By 2021, Reaching $520B

  • Bain predicts the combined markets of the Internet of Things (IoT) will grow to about $520B in 2021, more than double the $235B spent in 2017.
  • Data center and analytics will be the fastest growing IoT segment, reaching a 50% Compound Annual Growth Rate (CAGR) from 2017 to 2021.
  • IoT customers are planning and executing more proof of concept pilots, with many balancing their expectations regarding broader adoption.
  • Cloud Service Providers (CSP) are emerging as influential providers of IoT services, consulting and analytics for enterprises, leaving smaller opportunities for other providers in niche industries.
  • Security, integration with existing technology and uncertain returns on investment are the three biggest barriers to great IoT adoption in the enterprise.
  • Bain sees the need for vendors to concentrate on a few core industries with greater intensity to deliver more targeted industry solutions.

Enterprises adopting IoT are finding that vendors aren’t making enough progress on lowering the most significant barriers to adoption in the areas of security, ease of integration with existing information technology (IT), operational technology (OT) systems and uncertain returns on investment. As a result, enterprises are extending their expectations of when their use cases will reach scale and delivered results. These and many other fascinating findings are from Bain’s latest IoT research brief, Unlocking Opportunities in the Internet of Things. The PDF is downloadable here (PDF, 12 pp, no opt-in).

Additional key takeaways the research brief include the following:

  • The combined markets of the Internet of Things (IoT) will grow to about $520B in 2021, more than double the $235B spent in 2017. Data center and analytics will be the fastest growing IoT segment, reaching a 50% Compound Annual Growth Rate (CAGR) from 2017 to 2021. System integration, data center and analytics, network, consumer devices, connectors (or things) and legacy embedded systems are the six core technology and solution areas of the IoT market. The following graphic compares the CAGR of each area in addition to defining the worldwide revenue for each category.

  • Enterprises are still optimistic about IoT’s business value and potential to deliver a positive ROI; however many are planning less extensive IoT implementations by 2020. Bain finds that enterprises are still running more proofs of concept than they were two years ago. They’ve also discovered that more customers are considering trying out new use cases: 60% in 2018 compared with fewer than 40% in 2016.

  • Security, integration with existing technology and uncertain returns on investment are the three biggest barriers to great IoT adoption. Bain found that enterprises would buy more IoT devices and pay up to 22% more on average for them if security concerns were addressed. Integration continues to be a barrier to greater IoT adoption as well. Bain found that vendors haven’t simplified the integration of IoT solutions into business processes or IT and OT as much as enterprises have expected. The report calls for vendors to invest in learning more about typical implementation challenges in their customers’ industries so they can suggest more strategic, end-to-end solutions.

  • IoT vendors including CSPs generating the most sales are concentrating on two to three industries to scale the depth of their expertise quickly.  More than 80% of vendors still target four to six industries which makes it difficult to reach an expertise and knowledge scale that wins new clients. Bain finds that when vendors and CSPs concentrate on two or three domains, they gain mastery of specific markets faster and can provide insights to enterprises more effectively. Gaining expertise in two to three core industries is also an excellent differentiation strategy for vendors and CSPs who compete against price-driven IoT service providers.

  • Interest in remote monitoring and real-time monitoring is flourishing in IoT making this one of the fastest-growing use case categories. Being able to monitor production systems to the machine or asset level remotely and having the option to turn the data stream into a real-time source of knowledge is a fast-growing area of IoT adoption today. Based on interviews with manufacturers the popularity of Overall Equipment Effectiveness (OEE) is growing, fueled by the options available for remote and real-time monitoring of production assets. Bain discovered that industrial equipment leader ABB bundles remote monitoring into its connected robotics systems and connected low-voltage networks, which allows customers to troubleshoot and quickly identify issues requiring greater attention.
  • Cloud Service Providers (CSP) are emerging as influential providers of IoT services, consulting and analytics for enterprises, leaving smaller opportunities for other providers in niche industries. Amazon Web Services (AWS) and Microsoft Azure have emerged as the dominant CSP leaders of the fast-moving global market for IoT software and solutions. Bain finds that CSPs are successful in lowering barriers to IoT adoption, allowing for simpler implementations and making it easier to try out new use cases and scale up quickly. The study finds that the broad horizontal services provide little optimization for industry-specific applications, leaving a significant opportunity for industry solutions from systems integrators, enterprise app developers, industry IoT specialists, device makers and telecommunications providers.
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