A new study shows that manufacturing executives around the world are seeing real effects on productivity and profitability from investing in the Internet of Things (IoT).
What is IoT? Simply put, this is the concept of basically connecting any device with an on and off switch to the Internet (and/or to each other). This includes everything from cellphones, Keurig machines, washing machines, headphones, lamps, wearable devices and almost anything else you can think of. This also applies to components of machines, for example a down-the-hole drill, a crusher or a conveyor. Taking it one step further, the relationship will encompass not only people-things, but also people-people and even things-things.
The analyst firm Gartnernull reported that by 2020 there will be more than 26 billion connected devices. That’s a lot of connections.
A year ago, two-thirds of executives surveyed had no strategy for implementing the IoT; now, the same proportion consider themselves IoT-competitive. “There’s been a dramatic jump in awareness of, investment in, and profits from the IoT,” said John R. Brandt, CEO of The MPI Group, which conducted the study. “However, many smaller manufacturers are still unsure where to start.”
It’s crucial that these manufacturers catch up, said Brandt, or their competitors will gain an increasingly large share of the market.
MPI’s 2017 Internet of Things Study looked at the production of smart devices and the implementation of embedded intelligence within plants, processes and products of manufacturers around the world. Key findings include both good news and bad.
- Implementation is up, with 50 percent (median) of production processes now using the IoT, and 68 percent of manufacturers having plans to embed smart devices or intelligence into products.
- Manufacturers are making money off the IoT: 72 percent report increased productivity, 69 percent report increased profitability from application of the IoT to plants and processes, and 65 percent report increased profitability from sales of IoT-enabled products (e.g., embedded intelligence).
- The biggest challenge is still identifying opportunities to implement the IoT, with 46 percent of manufacturers naming this as a challenge.
- IoT data isn’t available to everyone who needs it, with only 34 percent of executives reporting that all corporate executives who need it have access (and even worse numbers for customers and suppliers).
“Two years ago, MPI research showed that a significant percentage of manufacturers hadn’t even heard of the IoT,” said Brandt. “Now, it’s become a crucial weapon in manufacturers’ arsenals as they compete in a digital age.”
The MPI Internet of Things Study was conducted by The MPI Group, and sponsored by BDO and SAS Institute Inc., in November and December 2016. More than 350 manufacturers participated in the study. MPI will soon release a full report on the study. The in-depth report will examine all study findings in greater detail, including key cross-tabulations (e.g., comparisons of small-revenue companies vs. large revenue companies), as well as ways in which the IoT will impact business going forward.
Brandt offers presentations on the IoT study data, via webinars and in-person events. Contact him at 216-991-8390 or by email at [email protected].