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Adaptive digital factory

The adaptive digital factory - The business value of IoT

Dr. Setrag Khoshafian,
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Connected devices are the main catalyst for digital innovation. They are transforming the relationships between manufacturers and consumers. The impact of IoT / IIoT is felt across industry sectors.

One of the most significant core use cases for IoT business value is the whole area of connected device monitoring and improvement. We can categorize here the value proposition for greater transparency and higher speed communications and orchestration for the health of the connected devices. Yes, "Machine Health." We shall cover this in the context of Insight-to-Action and it is one of the most important value propositions in Industrial Internet of Things. But there are other categories of business value.

OODA Loop – Insight to action

IoT sensors can determine if a connected machine or device is performing on par with its benchmark. Temperature, pressure, vibration, energy consumption, emission quality and other categories of specific sensor or aggregate readings can be used to gain insight. This insight is then analyzed through predictive modeling or real-time analytics to take the appropriate action.

  • Maintenance: The action is the preventive maintenance actually leading to prescriptive maintenance (what to do and by whom) which can result in substantial savings as well as revenue generation when the resolution is processed speedily and with high quality. Prescriptive maintenance avoids waste, frustrated customers, and potential loss of business. Other concrete benefits include reducing the liability of the manufacturer or insurer of the device before a breakdown or disaster.
  • Optimization and Innovation: Through observing the behavior of the devices and how they are used by the consumer the manufacturer can continuously improve subsequent releases or versions of the connected product. Observations can also result in process and product innovations as bottlenecks are analyzed in the overall performance of machines.

Improved and Optimized Asset Movement and Management

The assets could be the manufactured goods, or the assets can be the connected devices themselves. They could be simple devices with low energy and communication bandwidth capabilities that need a more sophisticated gateway to connect to the Cloud. In the context of the Industrial Internet powerful connected device have on-board computing capabilities that allow them to process data at the edges and connect to the Cloud through WiFi or 5G connections. Alternatively, for manufactured goods RFID could be attached and embedded in the packaging of the goods – for instance in transportation with containers. Service levels of assets – often parts in supply chain applications - could be critical.  This relates to the previous business value proposition. Here are some of the opportunities for business value:

  • On Time Delivery of Goods: optimization of the service level agreements for end-to-end delivery of the connected or tracked products or devices.
  • Intelligent Inventory Management: with IoT connected devices, manufacturers are finding new ways to optimize inventory levels and improve efficiencies and quality.

Monitoring and Optimizing Assets

The proliferation of connected home devices, such as NEST cameras, have illustrated the tremendous potential of monitoring: primarily for home security convenience and comfort. However, monitoring has many other business value advantages:

  • Monitored devices can help the discrete or process manufacturing business (in an industrial setting) avoid downtime. This could be critical for surviving and thriving – as the machines in the context actually help or support the manufacturing of the goods.
  • Monitoring patients through real-time feeds has several concrete advantages. Patients can be monitored remotely outside hospitals – with substantial savings. For some patients, connected remote monitoring can actually save lives
  • Monitoring Fields – especially with sensors, video, and drones – have many advantages in various industries from farming to oil fields to military applications.

Omni-Device Customer Experience Transformation

Better customer experience almost always results in additional purchases and improvement in the manufacturer's brands. Some detections can be leveraged in analytics to improve the operational performance of the machine.

  • Sales and Marketing: IoT devices are also becoming channels. Just as a mobile device or a browser handles customer service, IoT devices can be used to promote products, services, cross-sell, or upsell. For instance, automobiles connected through 4G LTE connections can offer Wi-Fi as well as vehicle diagnostics and maintenance opportunities. However, this connectivity also provides opportunities for advertising, sales, and marketing in a way that's convenient for the consumer.
  • Expand the Ecosystem: Through connected devices manufacturers are establishing new, innovative relationships with other merchandising channels to conveniently cross-sell or up-sell to the customer. For instance a connected car manufacturer can offer coupons for restaurants or retail shops leveraging customer preferences and geolocationing.

Is IoT just hype? Not quite. Yes, there is some hype about unrealistic expectations. It will definitely go through a "trough of disillusionment" and then to maturity – as modeled in the Gartner hype cycle. Having said that, the list above does illustrate pragmatic and real business value opportunities. The categories of business value here are not exhaustive. However, they do capture some of the most important ones thus far in the maturity of IoT.  Furthermore, they are interdependent and not orthogonal. But the key point to remember is the most important business value proposition for IoT in manufacturing as well as other industrial and consumer sectors emanates from the business process and collaboration levels of IoT – not the plumbing and infrastructure. IoT delivers and will continue to deliver concrete and exciting business values in cost savings, revenue generation and risk mitigation for the foreseeable future!

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Industry: Manufacturing Topic: Digital Transformation Challenge: Operational Excellence Product Area: Platform Product Area: Intelligent Automation

About the Author

Dr. Setrag Khoshafian is an author, speaker, and leading expert on the Internet of Things, digital process automation, and digital transformation. As Pega’s chief evangelist and VP of BPM technology, he provides valuable insight on business transformation and innovation to our clients.

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