As 2016 kicks off, the buzz around the Internet of Things (IoT) hasn’t decreased. If anything, it’s getting louder; the IoT is being recognized across the logistics, manufacturing, healthcare, and other industries as more than a passing fad, but an inevitable progression towards a more connected future.
For many companies, 2015 was the year that their investments in the Internet of Things technology and infrastructure started to pay off. 2016 will continue this trend and deepen the impact of the IoT. More companies will realize the value of data-driven decision making and the new business models enabled by the IoT. While companies already using the IoT will fill the gap between the data they’re collecting, and their ability to analyze and extract meaningful business insight from it.
Factories are Getting Smarter
Smart factories are on the rise. Consulting company McKinsey and Company estimates that factories and manufacturers could be the largest benefactors of the Internet of Things, with economic impact from $1.2 to $3.7 trillion per year. These businesses stand to gain from productivity improvements, energy savings, labor efficiencies, as well as inventory optimization, equipment health, and worker health and safety improvements. It’s no wonder then that this industry sector has been one of the earliest adopters of the IoT.
Stanley Black and Decker is an example of a traditional manufacturing company that has used IoT solutions to optimize its production line at one of its largest tool making facilities. At its Reynosa Mexico plant, thousands of employees are employed to produce millions of power tools each year across 40 multi-product assembly lines. As part of a continuous improvement cycle, Stanley wanted to improve the labor efficiency and transparency of its router production line, which produces nearly three dozen models of routers.
To create the metrics it needed to understand and see production processes in detail, Stanley rolled out a Real Time Location System which consisted of small active-RFID tags. These tags were attached to virtually every material asset in the assembly line and used WiFi to communicate these assets location and status in real time to plant workers, supervisors, and plant managers. In addition, an RFID tag was also attached to quality scales at the end of each production line, so good or bad production results are known immediately when the router box is weighed at the final test.
Along with a plant-wide WiFi network, floor managers were able to access up-to-the-minute production line data from anywhere inside the facility. It became easy to see each line’s output, whether production was hitting daily targets, and how quickly employees were completing their respective stages of assembly.
As a result, overall equipment effectiveness increased by 24 percent, labor utilization has improved 10 percent, and quality has improved with defects per million opportunities (DPMO) reduced by 16%. Responsiveness has improved as well. Mike Amaya, plant manager at Reynosa explains,
“Supervisors can now react more quickly because they get notifications of issues much earlier. The improved visibility means you can look at trends and material flow and fix any issues in the middle of the shift.”
While RFID tagging for asset tracking and visibility are already being used by many businesses, industry-wide rollout is still far off, meaning many manufacturing businesses stand to gain from this technology, as well as other Internet of Things enabled technologies for manufacturing such as geofencing to improve supply chain integration, and the use of Big Data analytics to improve production processes.
IoT is Enabling Logistics to Become More Efficient
Besides factories, the logistics and supply chain industry has also been quick to adopt IoT technology to streamline operations and goods flow.
The Port of Hamburg has been one of the largest logistics players taking advantage of the Internet of Things. As the 2nd largest port in Europe, the port handles 140 million tons of goods in 9 million containers each year. Up to 40,000 trucks arrive daily and it’s the port authority’s job to ensure that truck and ship movement is as smooth as possible. With traffic expected to double by 2030, the port needs to handle increasing freight each day with a limited amount of space, as it’s located right in the middle of Hamburg.
With space limited, the only way to grow was increased efficiency through technology. The port authority worked with SAP and Deutsche Telekom on a joint project called Smart Port Logistics to connect the port’s varied stakeholders through a mobile business cloud. Every component in the harbor – ships, trucks, people, bridges, cranes – is connected with everything else and providing business insight.
As a result, trucks reach their destination faster, drivers know where to unload more quickly, and shippers can plan their routes more efficiently and react to changes in real time. The port estimates that 5 minutes of waiting time are saved per driver and route, and trucks spend 5,000 less hours in the port each day.
These savings are just the beginning of the benefits of connected people, vehicles, and infrastructure. According to a study put together by Cisco and DHL, ports, warehouses, and logistics providers stand to gain $1.9 trillion in benefits over the next decade from operational efficiency gains from IoT implementation.
New Business Models are Being Formed
The Internet of Things is optimizing existing businesses models, but also opening up new ones for businesses creative enough to see the opportunities. Innovative companies like Semios in Vancouver are seeing the value that IoT can bring to traditional industries and providing new products delivered through creative business models.
Using a network of video cameras, pest traps, and natural pheromone-based pest repellant emitters, Semios sells orchard management services to farmers of high value fruit and nut crops. Traditionally growers would monitor pests by hiring inspectors every two weeks to walk the fields and inspect insect traps, but labor is expensive, making pest management one of the most costly aspects of these farming operations. With Semios’ connected pest management system, growers save on labor costs and get automated updates on pest management on a daily basis instead of bi-weekly. With more accurate, timely data, the natural pheromone based insect repellant, normally more expensive than pesticides, is able to be distributed cost-effectively. Connected moisture meters and weather stations inform farmers of irrigation effectiveness and alert them to frost conditions.
Rather than selling their pest management system as a product, Semios chose to operate through a service-based business model sold per acre. This reduces the need for customers to understand the technology and reduces up-front costs, making it much easier for new clients to try the technology. CEO Michael Gilbert explains,
“If we just bring hardware, it’s more difficult for new markets to readily adopt. But if we deliver it as a service through IoT, it makes it easier for growers to try and it’s the results that convince farmers that this is a better pest control solution.”
Wearables are Improving Our Health
The release of the Apple Watch has put wearables in the public eye. In terms of mass adoption, they’re still very much an up-and-coming technology; however, their potential for these connected devices to impact our lives is enormous.
Fitness trackers are some of the most popular wearables on the market today and one recent IoT enabled example by Swiss health company Roche demonstrates the potential that wearables may have in keeping us healthy by tracking various aspects of our health and making that information available to health professionals.
Dubbed Accu-Chek View, the system consists of a wirelessly connected blood glucose monitor, a fitness tracking band which tracks steps and daily exercise, and a mobile app. The app monitors data from the meter and band, and makes it visible to both the user and their doctor. The app gives immediate feedback on their health, making it easier for users to change behavior and also makes the same data available to their doctor. The physician has easy Cloud access to this information, giving them the ability to provide personalized advice remotely. This data is also generally higher quality and more timely than having to rely on patient testimony and reports of their exercise routines.
Accu-Chek View is just one example of the transformative changes that the Internet of Things promises for monitoring and improving our health and quality of life, especially for those with chronic health conditions. McKinsey estimates an impact of $170billion to $1.6 trillion per year by 2025.
IoT Benefits and Opportunities
From smarter factories, more efficient ports and warehouses, innovative IoT enabled businesses and health improving wearables, the IoT is making a big impact as we come into 2016. As more companies realize the value of data to their business operations, adoption will only continue to grow. Rich opportunities lie ahead for entrepreneurs that can take advantage of the new opportunities created by the Internet of Things and traditional businesses that can generate actionable insight from their IoT infrastructure to streamline their operations and make their organizations run smarter.