Opportunity for Factories
IoT is one of the hottest trending topics today. You can’t open a business or technology publication without finding an array of articles predicting the impact that this technology tsunami will have on businesses and even society. Much of what is discussed is related to consumer based applications of IoT: wearables and home automation, but according to McKinsey’s “Unlocking the Potential of the Internet of Things”, more than half of the value created by IoT is expected to come from factories and cities. Sure, it’s less sexy to talk about factory automation, but if you think about the potential impact, it’s dizzying.
Any Size Company Can Benefit
As I talk to manufacturing leaders interested in embarking on an Industry 4.0 / Smart Factory initiative, I discover that IIoT, the Industrial Internet of Things, is a puzzle for some. IndustryWeek is filled with case studies about large global companies who have made significant commitments to IIoT, and often those case studies are giant companies maintaining their competitive advantage using a “servitization” strategy for their globally distributed products. Those aren’t the companies I’m referring to. I’m referring to midmarket to enterprise private and public companies who want to use data from their sensors to monitor their less expensive assets to stay in front of their competitors. There’s enormous competitive advantage that can be gained by these modern day “Davids,” who are innovative and progressive thinkers. One of our most successful customer’s revenue is less than $50 Million in annual revenue. The path to getting started is a relatively straight-forward one: identify the proverbial “low hanging fruit”, validate that the business value is worth the effort and then go get it.
Step 1 – Find a Problem Worth Solving
The answer to the question: “Where to start?” has a very simple answer: start with a problem worth solving. I advise our customers to use a “crawl-walk-run-fly” strategy. It’s important to keep risks manageable making incremental investments aligned with a well-defined roadmap. Ensure every activity creates value as you implement incrementally. The first step is to make sure that you have a problem worth solving. In my experience, the COO, VP of Operations or Plant Manager has a large list of problems to consider. Most of these are related to improving OEE, or Overall Equipment Effectiveness. The problem could be to reduce equipment downtime or improve quality production, or to create new revenue streams for example.
Step 2 – Get the Data to Solve the Problem
I don’t recommend faith-based justification to Industrial Internet of Things projects. Like any business investments, you should do the due diligence to ensure that the expected return is worth it. Once you have a problem worth solving, you need to then develop hypotheses regarding the solution and identify the data you needed to test your hypotheses. In many cases, factories have invested in SCADA (supervisory control and data acquisition) systems and already have data readily available to do your analysis. If this is the case, you need to understand what you have, how to interpret it and how to apply it to your problem. We worked with a manufacturer trying to improve quality production. They had 2 years of data from their SCADA Historian, lab results from Quality Assurance, raw material data, etc. Our task was to determine whether we could build an analytic model that would be capable of providing the probability that the current production would pass quality control tests in near real-time combined with the adjustments necessary to increase the probability. Think about how powerful and valuable such information would be.
Step 3 – Define Success from the Start
Habit 2 in Steven Covey’s popular book, “The 7 Habits of Highly Effective People” states “Begin with the End in Mind”. This is essential to developing an effective business case for an Industrial Internet of Things project. This definition of success is the “return” part of a return on investment calculation. If you don’t know what success looks like, how will you know when you’ve achieved it?
Step 4 – Operationalize the Solution
Once you’ve solved the problem worth solving, you need to change the business processes to ensure you “lock in” the benefit. Operationalizing the solution can take many forms, but the important thing to keep in mind is that you will need to “tune” your solution periodically to ensure you continue to reap the benefits of your efforts.
You won’t be successful with every project, but by using a data-centric approach and avoiding the impulse to put sensors on everything from the start, you keep investments incremental and manageable. This iterative approach allows you to zero in on the key variables that are the predictors of the desired outcome of the process you’re attempting to monitor and manage without the costs of a monolithic project that may or may not yield business value.
Need a visual of how this all could work? The video below shows the possibility of the IIoT in medium sized companies. Take a look: How Manufacturers Solve Business Problems using Internet of Things (IoT)