Since Henry Ford, the alchemy of turning raw materials into mass-produced products has been complicated and challenging. At best, it has been a delicate and precarious balancing act; at worst, something akin to herding cats.
The trick has always been to align ever-shifting patterns of customer demand with far-flung ecosystems of miners, designers, suppliers, engineers, factory workers, truck drivers, sellers, and so forth. Yet the process of orchestrating such intricate value chains has often been based on art (hunches) more than science (data).
Today, however, the Internet of Everything (IoE) — the ongoing explosion in networked connectivity among people, process, data, and things — is transforming manufacturing in startling ways, just as it is changing so many other industries.
IoE delivers seamless, intelligent connections to every corner of the manufacturing value chain, optimizing the flow of products, information, and payments in real time.
The Cisco IoE Value Index study found that in 2013, manufacturing had the largest potential share of IoE Value at Stake, at $224 billion. Yet, it was poised to realize only 46 percent of that potential bottom-line value. The key to closing that gap lies in much-improved machine-to-machine and machine-to-people connections, resulting in smart factories, smart grids, and connected supply chains, among many other IoE-related innovations.
Looking at just one aspect of this transformation, let’s imagine how IoE would offer laser-focused, actionable insights into, say, a sudden spike in demand for a metallic purple iPhone cover. Analytics could first pick up indications of this trend on social media — and, by detecting the initial “wow” factor for that particular product and color, a company could actually predict the demand before the supply chain has to play catch-up. Machine-to-machine and machine-to-people connections could then prompt factories and suppliers to ramp up production of that iPod cover, particularly in the color purple.
In short, once production is synchronized with demand, customers talk to companies … that talk to supply chains … that talk to machines on the factory floor … that talk to the suppliers of raw materials — all in real or near-real time.
Once all aspects of the supply chain are connected through wireless sensors and networked mobility, companies gain visibility into every aspect of the product cycle — including consumer interest and post-purchase feedback; in-store checkout, carts, and shelves; loading docks, stock shelves, and warehouses; trucks and trains; factory floors and machines; all the way back to the mines and drilling operations where raw materials are extracted from the ground.
Those mines — at the very start of the manufacturing value chain — are another great illustration of IoE’s potential, particularly its ability to offer predictive insights. In addition to offering unprecedented improvements in production and efficiency, IoE provides a terrific boon to safety. With sensors in the ground and on the miners themselves, it is possible to detect danger signs before an accident occurs. Vibrations in soil and rock, or changes in human vital signs, can prompt real-time machine-to-machine or machine-to-people prompts that save property, investments, and, most important of all, lives.
In many developed nations, manufacturing has taken a beating in recent decades. Manufacturing accounted for 25 percent of GDP in the 1960s; today it is less than 10 percent. IoE can play a key role in maximizing those remaining manufacturing assets. For example, Cisco research found that IoE-related reductions in time-to-market drive a 1.2 percent bottom-line improvement.
And, by harnessing IoE innovation — in effect, “lighting up” dark assets with network connectivity — manufacturing companies will deliver more than just a product; they will offer customers an enhanced and highly differentiated experience. After all, companies that know their customers better than ever before can respond to their individual needs as never before. Cisco research indicates that integrated and intelligent automation will drive revenue uplifts of 3 to 4 percent.
Meanwhile, IoE collaboration tools will enable a new dimension of people-to-people connections among engineers, designers, suppliers, sellers, and operations teams. The result will be ever-tighter, customer-facing alignments across even the most far-flung organizations.
IoE may not be ready to herd cats (yet), but it is orchestrating real-time flexibility, agility, and responsiveness within the traditionally chaotic world of manufacturing value chains. All manufacturers will have to examine closely how best to light up their own dark assets across their entire value chains.
What do you think about IoE’s impact on manufacturing?