IoT & analytics in manufacturing
Short Takes...on Analytics
A blog by Ashwin Patil, director, Deloitte Consulting LLP and Lane Warshaw, specialist leader, Deloitte Consulting LLP.
Growth and efficiency through connected insights
Manufacturing history is a study in evolution, as industry has quickly adopted and adapted to new technologies, from power generation and electrification to automation and the digital age. That’s why the way that cars and other products are manufactured today looks very different than it did when Eli Whitney first developed a simple production line based on interchangeable parts used in the manufacturing of muskets.
In many ways, manufacturing has been part of the Internet of Things (IoT) throughout its entire history. Many companies have been embedding sensor-based technology in their devices for decades without fully realizing their potential. Manufacturing was one of the first adopters of robots and automated processes—many of these machines signaled distress with a sensor providing notification and addressing the problem before the machine stopped working, thereby avoiding downtime.
Today, thanks to the power of IoT, new data processing technologies, and availability of analytical forecasting models, the entire manufacturing value chain, from concept to completion and beyond, can now take advantage of this sensor technology.
For a modern example, some of today’s most sophisticated fighter jets are built almost completely out of outsourced parts. With a digital supply chain supported by advanced predictive analytics coordinating three principal partners, nine countries, 40,000 individual parts, and thousands of suppliers, a major manufacturer of these jets predicts it will soon be able to build one jet per day, a process that used to take months or years.
As this example illustrates, IoT and analytics are innovating manufacturing, improving interoperability across a large set of assets and linking machines, products, computers, people, and analytical resources into one ecosystem.
At the simplest level, IoT and analytics are creating two important buckets of value in manufacturing: growing the business and operating the existing business more efficiently.
In many ways, manufacturing has been part of the Internet of Things (IoT) throughout its entire history.
Growing the business with IoT
IoT in manufacturing is about creating smarter products, connecting and integrating with customers, and accelerating innovation. Done well, significant growth opportunities result. Let’s take a closer look at these areas and how IoT and analytics are having an impact:
- Creating smarter products. Connectivity among machines and people creates opportunities to develop smarter products and services so that more innovative products can be brought to market. Manufacturers now have essential information about how their products are performing in the marketplace, who is buying their products, and what options are important. For example, analyzing consumer data can give auto manufacturers important information about their future products–what options to include in a sports package versus a performance package. Analytics can also be used to read the signals across data and devices to help more proactively manage product defects and warranty issues.
- Connecting and integrating with customers. Added visibility into how customers are using a product also opens up revenue opportunities for manufacturers. IoT data can provide insights on brand loyalty useful in new service offerings. The days of the automobile sale signifying the end of the relationship with the manufacturer or dealer are over. Today, thanks to IoT, automakers are staying more visible to customers in the aftermarket and better connected through sensors that deliver crucial data about performance. This data results in a better understanding of how customers interact with the cars and what can be done proactively to improve the relationship with consumers, their dealers, third parties, and even with one another. The auto aftermarket will represent a $273.4 billion business by 2017; retaining even a small percentage could mean significant revenue increases for manufacturers. Further, identifying new business models represents a game changing moment for the auto manufacturers that is just now being understood.
- Accelerating innovation in engineering. Whether a manufacturer is producing cars, planes, or chemicals, the cycle time for creating, designing, and manufacturing new products is dropping significantly. It used to typically take five years to produce a new model of automobile, but today, designs are racing from concept to street in record time. This cycle time reduction–combined with the intelligence gathered about the product and how it performs as well as the insight into the customer and how they use the product–allows manufacturers to bring better, more targeted products to market faster.
The efficiency advantage of IoT
In operating the existing business, IoT and analytics are helping companies to connect a diverse set of assets. This results in efficiency gains throughout the manufacturing process. Here’s how efficiencies are being added, from more effective product design and planning to a more resilient supply chain and value-added product delivery and support:
- Accelerating planning and pre-manufacturing. Selecting suppliers, considering risk, managing material costs, and fluctuations—all of these processes can be fine-tuned through the interconnectivity IoT and analytics bring. Analytics can deliver insight to help companies gain a better understanding of customer preferences and desires, potentially resulting in improved predictability and performance in the marketplace. Understanding the products, and the specific features, that are being purchased allows companies to plan production to meet market needs.
- Streamlining the manufacturing process. The manufacturing process is changing dramatically as more companies incorporate IoT and analytics capabilities. Predictive tools and machine learning allow potential problems to be identified and corrected before they occur. The value of lean manufacturing and just-in-time processes like Kaizen and Kanban improves exponentially when intelligence obtained via IoT–enabled by RFID tags–and analytics can be applied.
- Improving post-manufacturing support and service. In the past, manufacturers often lost track of their products once they were sold. Now, thanks to new levels of connectedness and the higher-level insights of IoT and analytics, auto manufacturers can gather information from their customers effectively while improving service and support in the aftermarket, enhancing support costs, and building brand loyalty long-term.
In every facet of manufacturing, investment and speculation abound as companies explore the possibilities of IoT and analytics and become more insight-driven. The possibilities for applying analytics and the IoT to manufacturing may seem limitless, but one thing is crystal clear—technology-driven manufacturing innovations are evolving rapidly, which makes analytics and IoT a trend to watch in 2016 and beyond.
How do you see analytics and IoT having an impact on manufacturing in your industry? In what ways will connected insights help to grow your existing business or improve operations?
Read more about the evolution of IoT in Analytics Trends 2016: The Next Evolution.