The Business Case for Iot and IIoT for the Manufacturer

THE INTERNET OF THINGSThe business case for the manufacturer

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What is IoT

• IoT stands for ‘Internet of Things’• It’s really about collecting data on things

managed and acting on that data• Think input of sensors, communication

via networks, and actionable data as the output

• Now think industrial• IIoT stands for ‘Industrial Internet of

Things’• Think more sales, lower Cost of Goods

Sold, lower expenses, more profit

Internet of Things: (stylized Internet of Things or IoT) the internetworking of physical devices, vehicles (also referred to as “connected devices” and “smart devices”), buildings, and other items – embedded with electronics, software, sensors, actuators, and network connectivity that enable these objects to collect and exchange data. (from Wikipedia)

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Why Operations should care about IIoT

‘…highly instrumented verticals like manufacturing and transportation, large data sets are used to optimize

operational processes and extend the life of high capital cost assets.’ - IDC

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Study in 2014 by Tata Consultancy Services

$100 MILLION

12% of 795 executives were going to allocate

to IoT in 2015

1 in 10

15.6%

Avg.

Revenue Increase

30%

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invested in the U.S. alone in 2016

Investment LeadersTransportation

Manufacturing

$200+ BILLION

Study in 2016 by IDC

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Predictive Modeling Benefits• Will provide significant improvements in up-time (predictive maintenance)• Will provide significant information on equipment performance (real time)• Data for continuous improvement efforts – ever better efficiencies/utilization

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Industrial Internet of Things Adoption

35% are either moving forward or have pilot projects

Moving Forward13%

Pilot Projects22%

Don't Understand47%

Don't Care19%

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How IIoT Will Improve Financials

• Improve your P&L• Sales Income

• Increase sales by reducing product waste via monitoring data indicators

• Improving efficiency with data will increase production, annual sales volume, and capacity

• Cost of Goods Sold (COGS)• Reduce COGS by using data to maximize efficiencies and reduce

production costs• Selling, General & Administrative Expenses (SG&A)

• Reduce SG&A by monitoring/automating disposable reorders • Better proactive preventative maintenance through ‘data’

eliminates collateral damage failures, or undetected early indicators of improper maintenance, etc.

• Reduce insurance premiums – better safety record, reduced facility damage due to catastrophic failures

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• Improve your Balance Sheet• Debt Load / Current Ratio Improvements

• Reduce potential unplanned debt on balance sheet by proactive data-driven maintenance and repair

• Assets• Improve lifetime of capital equipment purchased and

unplanned costs

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• Improve your Cash Flow• Work In Process (WIP)

• Increase WIP by maximizing up-time of equipment via data-driven maintenance

• Increase production efficiency by looking through data for good/bad practice, and operation of machinery.

• Accounts Receivable (AR)• Increase cash inflows by getting more production by looking

for efficiency and utilization issues in the operation data. • Accounts Payable (AP)

• Less failures, lower insurance, fewer catastrophic events, longer lifecycles of machines and disposables all reduce your AP burden.

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Example market. Whey does ‘Agriculture’ care about IoT?

• Seems everyone in agriculture is investing in IoT• Costs of sensors and computer technology has

dropped• Computer processing power has increased• Using statistical process control• Leveraging programmable automation• Improve efficiency and utilizations• Production improvements through data analysis• Increased sales, reductions in COGS and SG&A

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Why manufacturers should care about IoT

• Learn and improve safe operation

• Learn about performance of the equipment

• Improve the procurement process of disposables

• Reduce insurance cost• Improve employee

performance

Improved financials by using data

• Learn and improve efficiency

• Learn and improve utilization numbers

• Improve up-time• Detect issues with other

machinery or processes

• Learn and improve productivity

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Example: Monitoring Disposables using IIoT – Actionable DataBlade• Data on items purchased

• Promotional offers based on use of preferred brands vs. alternatives• Enhanced features and functionality based on use of IIoT enabled disposables vs.

alternatives• Predictive analysis on when disposables need to be purchased, repaired, discarded• Automation in procurement of new disposable products• Option to disable operation due to use of unapproved disposables.

• Data on disposables performance• Track and estimate amount of production waste per disposable, per employee • Determine with data which disposable to use in which operation• Detection of aging so as to replace before productivity, safety are compromised

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IIoT – Actionable Data – Production Machinery

Production Machinery• Preventative maintenance• Proactive detection of issues/failures within the system itself• Lifecycle as a function of other factors (usage, operations,

etc.)• Maximize up-time using the above information and

coordinate repair timing to minimize downtime

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IIoT – Actionable Data – Production Machinery

Production Line• Efficiency, safety, utilization measures as they relate to:

• Other production lines (line-to-line comparison)• Team members, supervisors• Other identical equipment on other lines• Other machinery – can indicate whether another machine is underperforming past

results or other machines• Product tracking

• Use data collected from machine to determine varying levels of efficiency and utilization• As part of a larger IIoT system, track product as it moves through the process. Providing

real-time performance indicators• Are we slowing down or speeding up?• Are we stopped? • Are we spending too much time at one phase of the process or too little?

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IIoT – Actionable Data – Other Systems

Other Systems• How well are machines being maintained?• Are there correlations with data supported issues/problems

and other systems being used?• Can we integrate our data with other systems’ data so as to

model the entire production process and look for improvements in utilization, efficiency, safety, production, etc.?

Part of an IIoT Infrastructure• Eventually all systems within a plant will have sensors and

data which can be integrated with all machine IoT data to improve top- and bottom-line performance

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IIoT – Actionable Data – Employee

Employee• Time productive vs. total time on• Unsafe patterns in use recognized and recorded• Inefficient use of a tool observed via algorithms• Frequency of a tool being maintained.

THANK YOU

Data & Analytics

The Business Case for Iot and IIoT for the Manufacturer