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Tech blast: Industrial Internet of Things

In 2015, Chancellor Angela Merkel told attendees to the World Economic Forum in Davos, Switzerland; “We must deal quickly with the fusion of the online world and the world of industrial production. Because otherwise, those who are the leaders in the digital domain will take the lead in industrial production.”[i]

This merging of the physical and digital worlds, Industry 4.0, otherwise known as the ‘Industrial Internet of Things’ (IIoT), is enabling leading manufacturers to completely reimagine how they design and make products. There are multiple definitions of the Iiot, but in summary it is combined of four primary parts:[1]

  • Intelligent assets such as smart robots, sensors, controllers and any application software or machine capable of built-in intelligence, self-diagnosis, connectivity and support for analytics
  • A data communications infrastructure
  • Analytics and applications to capture, combine and generate meaningful information from this mass of data collected from a huge number of different sources
  • People

IIoT and the software solutions powered by it will touch nearly every aspect of Manufacturing moving forwards. It will bring together a series of sensors and intelligent machines across the value chain – in virtually all industry sectors – creating a multitude of networked, connected devices. IIoT will enable the generation, capture, retrieval and analysis of valuable machine, operational, and environmental data from a variety of disparate sources. Powerful examples include sensors designed to:

  • Measure the dryness and composure of soil so farmers can remotely water crops or add fertiliser
  • Detect corrosion inside a refinery pipe
  • Track the energy consumption of every machine in a production plant
  • Provide real-time production data to uncover additional capacity
  • Create visibility and control over your industrial control systems environment to prevent cyber-attacks.
  • Automatically alter the pitch on wind turbine blades to improve power output
  • Monitor machine status, reorder inventory, highlight issues and order replacement parts and their instalment
  • Make predictions about future demand for aftermarket parts based on wear-and-tear analytics

IIoT will therefore change the way businesses and industries work, helping to break down the system, functional and cross-company silos that have traditionally prevented full operational transparency. This will provide previously unobtainable levels of insight into the efficiency and productivity of the entire end-to-end process, allowing for more cost-effective decisions to be made.

The Potential of the Industrial Internet

The IIoT is already more advanced than the more consumer-focused ‘Internet of Things’. This is primarily due to the prevalence of ‘things’ – connected sensors – in the industrial world. There are already hundreds of millions of connected wired and wireless pressure, level, flow, temperature, humidity, vibration, acoustic, position, analytical, and other sensors installed and operating in the industrial sector.

Manufacturers are reimagining their value propositions and manufacturing processes

Collecting all this data through the network to the cloud allows for its consolidation (hence turning this collection of small data sources into ‘big data’) and analysis, enabling companies to interrogate thousands or millions of data points to learn, understand or control something more effectively.

Manufacturers are reimagining their value propositions and manufacturing processes, and looking at how smart devices, artificial intelligence and sophisticated robotics can work together. It is enabling businesses to tear down the silos between design engineering, manufacturing engineering, manufacturing operations, and after-market support, treating the supply chain as one process to be tuned and optimized. Advanced automation, complexity, and lean supply chains increase the probability that things can go wrong in manufacturing settings – and the costs of those disruptions are massive. In manufacturing, seemingly identical processes can produce big variations in output – finding out why could save billions.

Read More: The Fourth Industrial Revolution Timeline

Ahead of the game: Early adopters

Rather than having costly but unchangeable factory configurations and single-purpose robots, leading manufacturers like Siemens and General Electric (GE) are seeing the possibilities offered by automated, multi-purpose factories. McKinsey estimates[ii] that IIoT could have a potential economic impact of up to $6.2 trillion by 2025, and the potential to drive improved productivity across their $36 trillion operating costs across multiple industries including manufacturing, healthcare, and mining.

GE’s recently retired CEO, Jeff Immelt, shares McKinsey’s optimistic projections, calling the IIoT “beautiful, desirable, and investable.”[iii] The gains that Immelt is hoping for from IIOT look incredibly modest at first glance – an aligned series of 1% improvements across the various nodes in the supply chain. However, he is tapping into what the ex-British Cycling chief Dave Brailsford called ‘marginal gains’ – the power of incremental but aligned improvements in performance. Like Brailsford, Immelt sees the benefits of combining multiple marginal gains together – only across GE’s vast industrial landscape. Something he believes will create massive economic benefit. GE estimates that a 1% improvement in productivity across its global manufacturing base translates to $500 million in annual savings. Worldwide, GE thinks a 1% improvement in industrial productivity could add $10-15 trillion to worldwide GDP over the next 15 years.

As a specific example of how sensors on simple points of waste and failure can create big savings, the monitoring of valves controlling gas flows to flare stacks in refineries using wireless acoustic transmitters enabled one refinery to improve regulatory compliance, detect and repair faulty valves and reduce hydrocarbon losses by $3 million annually. The project paid for itself in five months, with an estimated annualized return on investment of 271% annualized over 20 years.[iv]

Challenges to consider

This new network of connected devices can help drive smarter, faster business decisions for industrial companies. A lot of the technology required to build the IIoT isn’t exactly new, more that each element has reached a maturity and cost effectiveness where it is now easily available. We will, within the next five years, start to witness the Internet of Things in full flow, with machines making replenishment decisions based on a wide variety of consumption and environmental data.

But there are challenges to be overcome – data integration, system interoperability and security for example. Currently there are a lot of systems and machines producing data, but very few ways to exchange and store information in a standardized way that enables the IIoT to be implemented at scale. A universal ‘machine data language’ that promotes plug-and-play solutions still needs to be developed.

Another inhibitor to implementation is the age of the legacy technology people wish to monitor. In manufacturing, it isn’t uncommon to have 20-year-old systems that still work OK and therefore create no burning need for upgrade. The inability of some of these older systems to be a part of a connected enterprise can therefore increase risk and impact of IIoT initiatives.

Security is another major issue. Any ‘thing’ or device that is controlled by network communication and connected to the Internet is vulnerable to being hacked. Manufacturers should therefore always consider how they could integrate an advanced cyber-threat protection solution into their network.

There is no silver bullet, and any large scale IIoT initiatives can be incredibly disruptive

However, the increasingly obvious benefits of the IIoT will see most manufacturers incorporating some elements into their business and forcing upgrades in their systems and equipment over the next five years. This is not dissimilar to how the integration benefits of ERP systems like SAP forced companies to upgrade their mainframe systems. However, like then, business leaders must recognise that there is no silver bullet, and any large scale IIoT initiatives can be incredibly disruptive. It is likely the organization will have to be realigned to support cross-functional decision making – but this is no bad thing and should be embraced regardless of whether the company is implementing IIoT technologies. Success will depend on clear senior executive mandate and support against organizational resistance and efforts to ensure that critical stakeholders are all on the same page.

Future developments

We are now entering an era of profound transformation as the digital world merges with our most critical physical assets. Innovations in hardware, connectivity, big data, analytics, and machine learning are converging to create massive value-creation opportunities. Merkel’s concerns in the opening quote were that if Germany does not take the lead in this area, its reputation as a manufacturing centre of excellence could be undermined.

The bottleneck isn’t really the technology; the fundamental components or ‘things’ are all there. What the market needs is more industry innovators who can put the technology together in unique ways that will solve specific industry problems. While there is an abundance of optimism about the potential impact of IIoT, most companies are currently waiting on the sidelines, watching how the early adopters fare and waiting for standards to be developed. The tough questions they must ask themselves is ‘What is the opportunity cost for waiting? What happens if a known (or unknown) competitor uses the IIoT as an opportunity to lower costs, increase reliability or improve their agility? What is the danger in reacting to what others are doing, rather than aiming to become a leader in this new, connected world?

[1] Definition from the ARC Advisory Group

[i] http://news.statii.co.uk/iot-vs-industry-4-0-vs-industrie-4-0-whats-the-difference/

[ii] https://www.mckinsey.com/business-functions/digital-mckinsey/our-insights/disruptive-technologies

[iii] https://www.fastcompany.com/3031272/can-jeff-immelt-really-make-the-world-1-better

[iv] http://www.controleng.com/single-article/industrial-internet-of-things-iiot-benefits-examples/a2fdb5aced1d779991d91ec3066cff40.html



This post first appeared on PointZero - A Manucore, please read the originial post: here

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Tech blast: Industrial Internet of Things

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