Industry 4.0 – The Industrial Internet of Things

Engineering is said to be entering Phase 4 of it’s being.  Or ‘Industry 4.0’ if you will.  The Industrial Internet of Things.  So what does this mean?  In very simple terms, the communication between ‘people, services and things’ in the manufacturing sector.

The Internet of Things has become the by-phrase for advancement and success across most if not all sectors, particularly consumer sectors.  Garner estimate 6.4 billion connected ‘things;’ will be in use this year, up 30% from 2015.  Goldman Sachs estimate that as many as 28 billion ‘things’ will be connected by 2020.

The Industrial Internet of Things (IIoT) is its younger sibling, but is certainly starting to pick up the pace and catch up with its older brother.  Don’t be fooled by the fanfare however, the IIoT will not negate the need for other services in the Industrial sector that have a proven track record.  Manufacturing Operations Management (MOM) systems and Machine to Machine (M2M) systems both have their strengths and will still play a key role in development moving forward.

Most MOM systems have fallen short on 4 key areas in the past: connectivity, Cloud, data analytics and application development.  This is where IIoT steps in.  GE says that while consumer productivity in the IoT sphere has seen a 19% year on year rise, in industry this has only been around 1%.  Not a very inspiring situation.  GE also believe that out of the data that is available, about only 1% of it is used regularly.  As they say, a very striking statement.

Things are however changing, and rapidly.  According to a TATA Consultancy survey, manufacturers using IIoT solutions saw an average increase in revenues of 28.5% from 2013 to 2014.  Business Insider estimate that global manufacturers will invest around $70 Billion in IoT solutions in 2020.  That’s an increase from $29 Billion in 2015.

The benefits of IIoT are there for us all to see.  Asset tracking, control room consolidation, predictive maintenance, autonomous robots, augmented reality, supply chain visibility and the ability to predict disruptive issues.  There are also barriers creating challenges: the threat of cyber-attack from criminals, foreign governments or competitors; the challenge of determining ROI; technical difficulties; and reluctance to implement automation which would surely lead to job losses.  The IIoT will open up new workforce requirements as it creates redundancy in others.  The manufacturing and industrial sector will see itself in a competitive situation with other sectors, competing to secure individuals with the correct skill sets.  Where repetitive jobs that have so far resisted automation will be less in demand, individuals with skills in data science, software development, hardware engineering, ops, marketing and sales will be in high demand.

Accenture consider the most conservative independent estimate on spending on the IIoT at $20 Billion in 2012, rocketing to a staggering $500 Billion in 2020 in the Industrial sector alone.  More optimistic predictions for the value created by the IIoT range as high as $15 Trillion GDP by 2030.

So how are manufacturers harnessing the power of the IIoT so far?  The Michelin Group have created sensors that sit inside their tyres that they use, combined with analytics, to coach truck drivers on how to save fuel.  Canny indeed, as they are not only providing a product to their client they are also providing a service, therefore increasing client retention.  The Apache Corporation, an oil and gas exploration and production company, uses the IIoT for operational efficiency – predicting downtime and plant and facility shutdowns.  They estimate that an increased pump performance of 1% across the board in the sector would earn the industry around $19 Billion a year.

JCB’s Livelink telematics system has now connected over 10,000 construction machines with equipment such as backhoe loaders, excavators and compact wheel loaders.  The predictive capability of the equipment allows users to almost guarantee availability of equipment to the right point and at the right time, virtually wiping out productivity downtime.

So where to next?  Industry experts believe, where so far, the consumer IoT and manufacturing IIoT have been set on quite separate courses and acting quite independently from each other, these worlds are due to collide.  From the Apple Watch for a field technician or the Google car becoming a precursor to the throne in automotive: competition is greater than ever and the race to the finish line becoming even faster.


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