Manufacturing – Part 1: The Impact of the Internet of Things

The impact of the Internet of Things on manufacturing is often talked about, but as ever, IT companies like to baffle the market with new buzzwords and to spread fear and uncertainty!

We read about the Industrial Internet, Industry 4.0 and smart factories. What’s really going on?

In simple terms this is all about using technology on the production line that incorporates sensors and controllers to make the production activity more visible, smarter and controlled in real-time.

More visibility means your own staff can deal with customer requirements more accurately, manage stocks, ordering and production to minimise costs, maximise output and quality.

Rather than basing this on manually created reports a week or a month old; devices and sensors are integrated into ERP systems to provide up to the minute information accurately, with minimal manual intervention.

Of course, it’s not a huge step from here to introduce automation for some aspects of decision-making. This can be a structure of simple rules – it doesn’t have to be rocket science. Or it can be sophisticated machine learning and Artificial Intelligence.

If production information is available internally then it can be made available externally.

Customer expectations across all industries are being reset by people’s own domestic experience of ecommerce – your customers will increasingly expect to be able to see and assess the progress of their own orders through your factory. Integration of your production activities with your customers, suppliers and partners becomes possible at a far more detailed level.

Perhaps the greatest opportunities are to continue to monitor and communicate with your products after they have been shipped and are in use. This enables new models for maintenance, support and entirely new opportunities for value-added services.

3D printing will have a revolutionary effect on many aspects of manufacturing in the future. Rapid prototyping and iteration are already becoming the norm, but the real revolutions will be in mass customisation where customer expectations will undergo major change in the coming years. Endless product versions and variations will become the common place.

Equally significantly, 3D printing will massively reduce the need for stock holding, especially for spares, which will free up cash. This may have a transformative effect on smaller companies and their ability to invest in these new trends.

At a macro-level, these changes will all reduce labour costs which will reduce the attractiveness of low-cost economies, reduce economies of scale, and will enable a return to local manufacturing. We believe that ambitious mid-sized businesses will find huge opportunities in this change.

Finally, it’s worth noting that these trends towards local manufacture are forecast to reverse decades (or centuries) of growth in global trade of manufactured goods. A recent ING report estimated a reduction in world trade by as much as 40% by 2040! This will affect a wide range of industries from shipping to insurance, and may have very broad-ranging geopolitical ramifications as well. It won’t be the first time that manufacturing has changed the world!

You may also like to read the additional content on the Manufacturing series:

Manufacturing – Part 2: Board checklist for successful ERP projects.

Manufacturing – Part 3: Getting data right.

Freeman Clarke is the UK’s largest and most experienced team of IT leaders and we frequently work with manufacturing clients to help them deliver transformational programs of improvement and system efficiency. We are entirely independent of any technology or suppliers.