How IoT is a game changer for manufacturers
To take advantage of the Internet of Things manufacturers need to create well thought out connected devices supported by secure networks and processes. Sean Lorenz, Director of IoT Market Strategy at Xively looks at the elements manufacturers need to consider if they are to succeed in this new and lucrative market.
If you haven’t heard already, the Internet of Things (IoT) is coming and it is beginning to make shockwaves across the manufacturing industry. Enabling greater interaction with end users and providing unprecedented levels of information about how their product is being used, the IoT is radically changing the way manufacturers think about their products.
Many businesses are already building connectivity into products not traditionally associated with being on a digital network. From cars to home appliances, analyst firm Gartner estimates there will be close to five billion connected ‘things’ by the end of 2015, a figure that is likely to rise to a staggering 25 billion by 2020.
But not all of these products will be successful and achieve the results manufacturers want. To really benefit from the IoT revolution, producers need to be aware of the potential challenges they face and tackle them head on.
Knowledge is power
The greatest challenge is also the greatest opportunity: data! By connecting a product to the internet, a manufacturer should expect to receive granular, real-time information about how it is being used.
Currently, exploring in detail how a consumer uses a product requires focus groups, questionnaires and so on. While these can be useful, they do not provide accurate data as they are in controlled environments, people do not totally recall how they use a product or they behave differently when being observed. Receiving continuous and detailed data from the product itself shows exactly how it is being used in the real world, highlighting which settings, time of use, possibly location are most popular and those that are not. It will also demonstrate any glitches. All of which allows for the next iteration of the product to be improved and provide useful marketing information.
Yet there is a ‘but’ and it is a significant one. Collecting detailed information on a regular basis from every device you have on the market is going to create a massive amount of data that will keep on flooding in. This data needs to be managed, stored, collated and analysed, and protected from falling into the wrong hands, a task many manufacturers would find overwhelming on their own.
Improving customer service
Once the consumer knows that you have access to how they are using the product, there is no escaping the possibility that they will expect a greater level of customer service from you. That includes being able to identify problems as, or even before, they occur as well as providing hints and tips on how to get the most out of your product.
While this is a great unique selling point (USP) that could increase sales, such a high level of interaction is new territory for manufacturers who normally leave customer service to third parties. This requires either have to create brand new customer service models or trust in companies experienced in using Big Data within CRM systems.
Another USP is that having such a capability creates is the ability to identify or predict when consumables used alongside a product need replacing. Savvy manufacturers can then offer replacements either through themselves or affiliates to create an additional revenue stream.
Greater interactivity for the consumer
Receiving and analysing user data from a product is likely to be the first step of any manufacturer looking to venture into the world of IoT. It allows the creation and testing of the appropriate networks, checks and measures without adversely affecting the customer experience.
The next step is to possibly create some connected interactivity for the consumer to use on the device, such as being able to control it remotely or view key usage/servicing statistics via a network portal.
A new business model
By jumping into the IoT manufacturers are entering an unfamiliar world, they are hardware people, not software engineers, so they need to treat a connected product as they would a new venture. Those looking to succeed in the IoT market need a lean start-up approach.
This includes looking at the benefits of creating a connected version of their product, exploring the level of demand, how it should look, design, testing and so on.
Alongside the research and development of the connected product, exploring how to create the networks and processes needed to support them is vital. As covered earlier, these need to offer tight security and easy-to-use management tools, as well as providing scalability, to allow an unlimited number of items to be added to the network. To do this internally will be extremely costly and there is no guarantee it will succeed.
Instead it is better to turn to experts, who are able to provide the secure, scalable networks and platforms for a fraction of the cost of building such an infrastructure internally.
The IoT is making waves across the industry, but the question is: will you be riding those waves or drowning in the deluge?
IMF: Variants Can Still Hurt Manufacturing Recovery
After a year of on-and-off manufacturing in the US, UK, and the eurozone, demand for goods surged early last week. Factories set growth records in April and May, suppliers started to recover, and US crude hit its highest price point since pre-COVID. As vaccination efforts immunise much of the US and UK populations, manufacturers are now able to fully ramp up their supply chains. In fact, GDP growth could approach double-digits by 2022.
Now, the ISM productivity measure has surpassed the 50-point mark that separates industry expansion from contraction. Since U.S. president Biden passed his US$1.9tn stimulus package and the UK purchasing managers index (PMI) increased to 65.6, both sides of the Atlantic are facing a much-welcomed manufacturing recovery.
Lingering Concerns Over COVID
Even as Spain, France, Italy, and Germany race to catch up, and mining companies pushed the FTSE 100 index of list shares to a monthly high of 7,129, some say that UK and US markets still suffer from a lack of confidence in raw material supplies. Yes, the Dow Jones has made up its 19,173-point crash of March 2020, and MSCI’s global stock index is at an all-time high.
Yet manufacturers around the world realise that these wins will be short-lived until pandemic supply chain bottlenecks are solved. If we keep the status quo, consumers will pay the price. In April, inflation in Germany reached 2.4%, and across the EU’s 19 member countries, overall prices have increased at an unusual pace. Some ask: Is this true recovery?
IMF: Current Boom Could Falter
Even as Elon Musk tweeted about chip shortages forcing Tesla to raise its prices, UK mining demand skyrocketed; housing markets lifted; and the pound sterling gained value. The International Monetary Fund (IMF), however, cautioned that manufacturing recovery won’t last long if COVID mutates into forms our vaccinations can’t touch. Kristalina Georgieva, Washington’s IMF director, noted that fewer than 1% of African citizens have been vaccinated: “Worldwide access to vaccines offers the best hope for stopping the coronavirus pandemic, saving lives, and securing a broad-based economic recovery”.
Across the globe, manufacturing companies are keeping a watchful eye on new developments in the spread of COVID. Though US FDA officials don’t think we’ll have to “start at square one” with new vaccines, the March 2021 World Economic Outlook states that “high uncertainty” surrounds the projected 6% global growth. Continued manufacturing success will in large part depend on “the path of the pandemic, the effectiveness of policy support, and the evolution of financial conditions”.
Mathias Cormann, secretary-general of the Organisation for Economic Co-Operation and Development (OECD) concurred—without global immunisation, the estimated economic boom expected by 2025 could go kaput. “We need to...pursue an all-out effort to reach the entire world population”, Australia’s finance minister added. US$50bn to end COVID across the world, they imply, is a small investment to restart our economies.