Manufacturers who have embraced IoT are leading the digital transformation

Jun. 2, 2016 – The Internet of Things (IoT) has already transformed the world of business — offering new opportunities to compete in the market, enabling companies to change business models and creating far greater insight into customer needs.

While many industries already have seen massive benefits, one industry stands out among those that is taking full advantage of IoT — manufacturing. As an industry that has been around for centuries, the rapid pace of transformation today is creating a revolution unlike anything before. New technologies seem to pop up daily and almost all manufacturers have moved into the connected- or IoT-era. Today, machines communicate with other machines and with humans, and provide in-depth data and analysis that allows for close control of the supply chain, product monitoring, and even customer monitoring after products are in the market.

While some manufacturers struggle to keep up with the changing technologies, others are taking full advantage of the streamlined processes, new business models and better customer service that digital transformation is enabling. According to a report from Tata Consultancy Services (TCS), manufacturers are seeing three major impacts as a result of IoT initiatives.

• Greater insight into product quality:
IoT has enabled manufacturers to put smart sensors on nearly everything, from assembly equipment, to inventory shipments, to the actual products. According to TCS, more than 22 per cent of companies have implemented digital sensors that collect and return data on performance and service after products are sold and being used by customers. In fact, manufacturers are putting a large part of IoT budgets — 35 per cent — toward product monitoring, which allows companies to fine-tune products based on how customers are using them.

• Better customer care thanks to smarter devices:
As companies are able to track products and monitor quality more closely, customers benefit by receiving better, more immediate customer service. While manufactures are spending about 22 per cent of their IoT budgets on customer monitoring, many are actually moving their customer care services closer to consumers with smart sensors. TCS found more than 24 per cent of companies monitor customer data through mobile apps and nearly eight per cent track data through wearable devices.

• More precise monitoring of the manufacturing process:
While supply chain monitoring isn’t getting the most attention from the budget — about 26 per cent of most manufacturers’ total spend — it is contributing to revenue gains, and TCS predicts the spend will increase over the next few years. IoT technologies like sensors, digital video and software help companies keep a close watch on the manufacturing process from start to finish, giving them greater insight into product quality and warning of any potential issues on assembly lines before time and revenue are lost.

Embracing IoT through the three stages of digital transformation
While some manufacturers are revelling in the benefits of the new connected world, others are struggling to keep up with the ever-growing number of innovations. How does a manufacturer who is unsure of joining the digital transformation get started? For most, there are three stages as they begin to move from the world of old-fashioned manufacturing into the connected world.

• Digitalization:
All manufacturers want to streamline business processes. Digitalization is like dipping a toe in the water of the digital technology pool. For example, moving a plant’s tracking system from static charts to a technology enabled, live and dynamic system is often the easiest first step.

• Digital transformation:
After the first taste of digitalization, there is often a hunger for more, and digital transformation tends to be the next step. Digital transformation allows manufacturers to revamp business process and create entirely new user experiences using technologies like mobile apps, social collaboration or predictive analytics. For example, predictive maintenance gives manufacturers insight into when a machine needs work and prevents equipment failures before they happen.

• Digital reimagination:
The final and most sophisticated step is full reimagination. Digital reimagination allows for completely new business models enabled by technology. For example, virtual simulation allows plant operators to reimagine business processes and deliver more efficient operations by identifying critical bottlenecks in flow, understanding the behaviour of systems and deploying solutions.

What does the future hold?
In the next five years, TCS predicts a shift in the way IoT budgets are allocated among manufacturers, with more money going toward supply chain and customer monitoring as the ways in which manufacturers use IoT change. In addition, manufacturers can expect IoT spending to continue to pay off in the form of improved service, enhanced products, tailored customer segmentation, targeted marketing and reduced field service costs.

Among manufacturers who are in the early stages of digital reimagination, there are a few key factors to ensure successful IoT initiatives. First, companies need to outline a clear strategy that includes identifying new revenue opportunities and business models, and creating a clear plan for capturing and analyzing the data. In regards to technology, integrating IoT data with existing enterprise systems can be challenging, but if handled correctly can lead to success. Finally, embracing the new “reimagined” or connected environment requires a company-wide culture change, so introducing new technologies and explaining the need for changes throughout the process is key to acceptance.

Looking ahead, manufacturers have a virtual supermarket of technologies to try, purchase and implement, and currently, many are eager to invest. While the plethora of choices makes some want to try every single item, the key to success is determining which technologies fit into each manufacturer’s the long-term strategy and carefully planning a digital transformation.

Sreenivasa Chakravarti is the global head of manufacturing innovation & transformation at Tata Consultancy Services.