Feb 9, 2016

How IoT Is Changing Manufacturing, by Meenu Sharma

My colleague, Prasad Satyavolu and I assessed the Manufacturing market and both agree this is an exciting — and challenging — time for designing new products. Thank you IoT-based technologies! Changes in manufacturing processes, supply chains, robotic plants, embedded sensors in products, and manufacturing machinery are all driving real-time operational efficiencies, reducing risks, and at the same time creating grounds for innovation and business impact.

The boundaries of competition are changing the marketplace with new business models. Uberization is now a verb. Just look at the leaders: GE, Siemens, Caterpillar, Harley Davidson, Ford, and recently Foxconn are all emphasizing digitizing their plants to improve efficiencies, cut costs, and “allow decisions to be made at the unit level.” GE is even shifting its brand to a new kind of industrial company, a digital company.

Breaking down digitization

Digitization impacts all four elements of the organization: informed products, processes, people, and infrastructure — the integration of which is essential to automated, smart, and streamlined manufacturing.

Products: Products are becoming smart, meaning that they’re getting embedded (usually via sensors) with intelligence connected directly to the customer to monitor usage, increase productivity, and help guarantee reliability. Advanced sensors and software applications like analytics and cloud-based programs have made this possible.

A smart or informed product also takes autonomous action, improving productivity and efficiencies through real-time supply-chain improvements. But it goes beyond better efficiencies. When products are smart, new business models are possible. New business models will be built around analyzing and monetizing sensor-generated data. And customers can be directly involved in the ideation and design of products. Just take a look at Procter & Gamble’s Connect + Develop program, where customers and partners share ideas and insights in new product development.

People: People are critical, but skill sets will shift. On the shop floor, it’s not going to be about machining skills. It will be about making meaning from loads of generated data for informed decision making and quick action. It will be about marrying the physical shop floor with the ability to redesign and reinvent old processes and systems.

According to research conducted by the Center for the Future of Work, the top two skill sets sought by companies are product designers and data scientists. With a projected skills shortage of over 3 million in manufacturing in the next decade and supply chain alone creating up to 1.4 million job vacancies by 2018 according to MHI research, people are, to put it simply, not going anywhere soon.

Processes: A real-time information highway between supplier and customer reconfigures the supply chain by making it more flexible and adaptable. Rote processes are automated, and data generated by automation helps with granular visibility and meaningful insights across the global value chain.

That said, while modern processes imply breaking information silos within the company and encouraging collaboration among different functional groups as part of the strategy, one of the most neglected pieces of the puzzle has been the cultural aspect of driving change within the organization. Companies need to move away from the cultural stagnation of how they have always operated and toward creating new sets of operating principles and requiring strong change-management initiatives.

Infrastructure: And last but not least is the role of an informed infrastructure — a combination of hardware and software applications to create an ecosystem for enhancing performance and efficiencies. An example is Cisco’s virtual manufacturing execution system for managing real-time production operations.

Though smart infrastructure has been around in manufacturing plants for some time, robotics, cloud, mobile, and analytics have taken it to whole new levels of intelligence and productivity. However, the big concern would be not only to manage the infrastructure complexities but also to keep it secure from digital threats.

In a nutshell

Short of unpredictable geopolitical events that upend trade and manufacturing, it’s the shifts in consumer demand cycles, ownership models, and product transformation to be smart that are creating new cost and revenue dynamics for traditional manufacturers. For next-generation manufacturing to succeed, organizations must embrace digital technologies across the four pillars of the organization to elevate performance, improve productivity, and create profitable business outcomes.

What are your thoughts? How do you think IoT is changing manufacturing? Let’s talk.

This blog was co-written by Meenu Sharma and Prasad Satyavolu.

Opinions expressed in this blog are of the author and may not represent Cognizant’s point of view.

Meenu Sharma

Meenu Sharma is an Associate Director with Cognizant’s Center for the Future of Work (CFoW). With over 14 years of experience, Meenu…