IoT — Getting to 4.0

IoT — Getting to 4.0

Modern Factories, Source:

Connection changes the nature of the object — this quote from the book “The Seventh Sense” by Joshua cooper was evident when I worked on the IoT Horizon 2020 program in Africa. As technology progresses more and more devices will be connected, resulting in a complex web that will create value for humans, governments and business. Ericsson and IDC estimate that by the year 2020 there will be approx. 30 billion connected devices in the world. A report by IHS markit estimates that 75% of all such connected devices in the year 2025 will be used in manufacturing processes.

This may sound rocket science to many people who are unfamiliar with the terminology of cyber-physical systems, but in essence it quite simple and not even new. A good example of such a cyber physical system is the Engine Control Unit (a small computer) installed in the cars. In early days, cars came fitted with a carburetor that mechanically infused air and gasoline and then injected the mixture in the engine. Then car manufacturers innovated and installed an ECU in the engine. As a result, most modern cars now have electronic injectors that inject the optimum mixture of air and fuel required by the engine. Thereby reducing the wastage and emissions, and improving performance. At the same time the ECU also provides real time information about the performance of the engine parts, thus saving substantial cost is maintenance and repair.

ECU, Sources:

Now imagine an entire factory fitted with such small chipsets and the benefits it will provide to manufacturers. General Electric clearly sees the advantage and thus embarked on this journey in 2011 by investing $1 billion in sensors and software systems to optimize performance of jet engines, locomotives and turbine used by their customers. As a result, GE generated $1.4 Billion in revenues in the year 2014 by selling analytical data and predictive analysis that led to better operational efficiency and lower maintenance costs. It is expected that in the near future most of our machines and factories will be equipped with such cyber physical systems that will result in similar efficiency and performance as in the case with GE.

But before jumping onto the bandwagon it is also necessary to understand the complexities and pitfalls that come with such systems. Some major challenges that experts and startups such as Pin2Pin are trying to address are as follows:

1. Data security and privacy — connected machines will generate huge amounts of digital data — personal, mechanical and environmental — which needs protection from hackers and theft. Theft of data will not only compromise the economic viability of such models but can also lead to mechanical failures and accidents that could bring the adoption of such technologies to complete halt.

2. Economic viability of data — Just generating data is not enough. Companies that are already generating data are hardly able to utilize it fully. Mckinsey states that only 1% of the total data collected by manufacturing concerns is used for decision making and production optimization. If the data fails to generate tangible results in the future, then adoption would slow down.

3. Common industry standards for hardware and software — It goes without saying the standardization leads to reduction in cost. This is applicable to most industries and businesses. It is for the same reason that companies such as Audi, BMW and Mercedes formed a Joint Venture to acquire Here map services. The value of having a common standard is clearly visible as it is cheaper for hardware manufacturers and software developers to design solutions that can be have large scale applications. As more manufacturers adopt a common standard, the hardware manufactures will realize higher economies of scale and software developers will find it easy to innovate the current set of functionalities, thus reducing the overall cost of operations.

4. Open or closed network — Gatekeeping will become as important as the internal security of the systems. Open networks will allow collaboration and innovation, whereas closed networks will provide better security blanket to developers and businesses building the systems. The right balance has to be struck between the two methodologies so that it results in optimum security with maximum space to collaborate.

5. Adoption — Cyber Physical have always been thought of as a replacement for human labor. This is true in the sense that we won’t be requiring human beings to work on repetitive tasks that smart machines will be able to do more efficiently. At the same time, it will create new opportunities in the field of Big Data, Analytics and Software development. A major impediment to this change is the organizational behavior and openness to adopting new technologies. In order to implement these changes companies will have to design strong digitization strategy. More importantly the managers implementing these changes will have to succeed in learning and adapting to new systems and ensure that everyone in the organization is willing to do the same.

It is expected that in the coming decade, most of the challenges will be addressed as more resources and R&D goes into developing advanced, secure, and stable systems. Companies such as Pin2Pin will play a vital role in the developing such systems. As explained by the CEO Ran Oren, Pin2Pin is developing a system that will optimize the supply chain between spare part manufacturers and the purchase departments of large electronic manufactures (OEM’s). Having such a system in place will lead to big gains because manufacturers will be able to optimize inventory management by reducing the risk of understocking and overstocking and reduce lead time because of better tracking and real time information. Concurrently, consolidated data at service provider’s end will enable purchasers to compare prices and get real time feedback on the spare parts they plan to order. Although Ran is confident that such a system is required, it will take time and patience to win the confidence of the involved parties, eventually leading to wide application and easy adoption of these systems.