A few years ago, my colleagues at Capgemini Consulting published a paper with the findings of their study, showing the relative the rate of digital transformation in the manufacturing industry. Their paper cited a recent (at the time) survey of industry leaders, in which only 25% believed that the manufacturing industry would be ‘strongly impacted’ by digital transformation over the coming five years. My colleagues argued that digital innovation would be critical to driving value in manufacturing. To do this, they suggested, manufacturing companies would need to adopt a systematic approach to addressing digital opportunities across the value chain.
Figure 1: Source: Capgemini Consulting & MIT
More recently, when we looked at the rate of digital transformation today in Capgemini Consulting’s analysis with MIT we saw that manufacturing does indeed lag behind other industries, going slow on digital intensity and transformation. So, in light of a rich seam of opportunity with the proliferation of SMAC technologies and IoT, what’s holding manufacturing back?
Manufacturing is the workhorse of industry, evolving alongside—and in light of—globalization, automation and shifting consumer expectations. But it has not transformed in the same way as other industries when it comes to process and leverage of new technologies. End-customer facing industries such as banking, insurance and retail have started with the customer, and driven digital back through their businesses. Traditionally, manufacturing’s focus and investment have been on new business models and new products. These are valid endeavors, but deep digital transformation leveraging IoT offers the opportunity to revolutionize the very business of manufacturing—production. So, while manufacturing organizations are building digital capability slowly but surely, the connection between capabilities is often missing—and with it, a huge opportunity to drive value.
But how much longer can manufacturers ignore then potential of IoT to transform the industry? Some estimates have valued the IoT impact for manufacturing at around $2.7 trillion, with an expected opportunity for up to a 50% increase operational excellence. The issue is no longer whether there is value to be gleaned from IoT, but how to make it happen.
Common to all industries is more or less the same set of organizational challenges (How do we make sure we have the right skills sets and foster collaboration? Are we ready to transform entire processes?). There are data challenges (How do we accumulate, store, aggregate and extract insights from large swathes of data over time? How do we adapt existing asset management systems?). And there is risk to consider (How do we future-proof systems? How do we keep them secure, if we are inviting new technologies to come and play?). These are true for manufacturing, especially the data and asset management challenges.
No wonder, then, that manufacturing as an industry has shown a tendency to stay with what it knows best. We see a symptom of this in automation. Automation has long been a manufacturing priority, but it often occurs in siloes, or islands of automation within the figurative steam of intense effort and output. With different technologies being used at distinct stages of the process, and nothing to link them, it’s easy for fragmentation to occur. And this means more scope for wastage and less scope for innovation. But IoT can—and will—change that.
It’s time for manufacturers to board the IoT ship and set sail, linking up those islands of automation and driving value. If this sounds like a something of a paradigm shift, then to a degree it is. Fortunately, there’s a life jacket available. At Capgemini we’ve developed an end-to-end solution that is capable of making relevant connections between sensor data, analytics, asset information and vital systems within the manufacturing ecosystem. With meaningful connections comes the ability trigger the right actions, in real time. For instance, this would enable factories producing similar products in different geographies to rapidly and seamlessly shift production from one area to another in the event of, say, an environmental disaster or supply issues (such as transportation costs). Organizations do this today to work around production shutdowns and retooling, but IoT allows these decisions to be made much more rapidly.
It requires re-thinking processes, harnessing technology and leveraging data like never before. But with the right insights applied to the right processes, better connections between different parts of the manufacturing process can be made, breaking down siloes and opening the doors wide for innovation and value creation opportunities. Key to this shift is integrating the right systems, to allow manufacturers to welcome in the further possibilities that IoT has to offer. For example, integrating Manufacturing Execution Systems (MES) with Enterprise Asset Management (EAM) and Enterprise Resource Planning (ERP) systems marries up sensor data with asset information in a way that can bring value—such as the ability to carry out pre-emptive maintenance before problems arise.
Capgemini’s end-to-end IoT framework for manufacturing aims to make this possible by methodically working right the way from initial data aggregation (from both digital and analogue sensors) and applying insights from this data to, eventually, self-correcting machines.
Figure 2: Capgemini’s IoT framework for manufacturing
The framework underpins a single-stack solution that leverages powerful solutions based on IBM software, including Predictive Maintenance and Quality (PMQ) to gather, monitor and report data gathered from high-value assets, predictive analytics with SPSS and IBM’s Bluemix platform, from which multiple applications can be quickly and cheaply created, deployed and managed in the cloud. Here, specific services and APIs built around IoT, analytics and insights can be leveraged. By running DevOps in this way, manufacturers can dramatically accelerate innovation—meaning weeks rather than months. From this perspective, the possibilities begin to look richly promising.
Manufacturing may have lagged in digital in the past, but it’s time to look to the future. Perhaps it’s true to say that where manufacturing is concerned, the next industrial revolution is coming—and it’s called Internet of Things. Now, manufacturing can truly dare to transform.
 Source: Oxford Economics (2011): “The New Digital Economy – How It Will Transform Business”, global survey of 363 business executives across industries