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Creating New Digital Manufacturing Businesses To Drive More Growth

Bottom Line:  IoT lessons learned on the shop floor transfer to new product development and are fueling the next generation of smart, connected products. Capgemini predicts by 2020 47% of all products will be IoT-enabled, capable of supporting new product-as-a-service business models.

IoT is proving to be a pivotal in digitally transforming manufacturers and enabling entirely new product lines and business models. Capgemini recently interviewed over 1,000 senior executives of large, discrete manufacturing organizations around the world. The manufacturing execs predict that 47% of all their products will be smart, connected and capable of generating product-as-a-service revenue by 2020. 66% say the many challenges of sustaining legacy products while pursuing new product-as-a-service digital business models makes IoT the platform of choice.

IoT Is Digitally Transforming Manufacturing In Real Time

In a recent conversation with the CEO of a machinery manufacturer the topic of digital transformation came up. He and his team choose to look at digital transformation through the lens of the customer first and prioritize the processes most impacting them. “It forced us to realize that we’d allowed our CRM, PLM, CAD and ERP systems to run at their own cadences too long and we needed them more synchronized around products,“ the CEO said. “As soon as we digitally transformed them around products and started getting them all on close to the same cadence, customer response times on everything from queries to getting order out ahead of schedule improved.”

When asked where he saw digital transformation efforts making the most difference, he mentioned the following two:

  • A real-time, 360 degree view of each product line for the first time – Over 50% of the machinery they sell is build-to-order with customers changing everything from core functions to upsells, cross-sells and integration options including IoT sensors, PLCs and other monitoring peripherals. Having real-time data for the first time helped them t troubleshoot bottlenecks faster and meet customer delivery dates.
  • Lessons learned adopting IoT on the shop floor transfer to new products – Capgemini’s study, Digital Engineering: The new growth engine for discrete manufacturers found that the manufacturers succeeding most with their digital transformation efforts are able to successfully balance six different dimensions of engineering transformation maturity shown in the graphic below. IoT is the pivotal to each of the six dimensions in the graphic succeeding, further fueling new digital business models in manufacturing:

Factors Fueling IoT’s Soaring Growth In Manufacturing

Manufacturing is the most data-intensive industry by far, generating 1.9 petabytes of data annually, yet ironically 4 in 10 manufacturers have little to no real-time visibility into their manufacturing operations.

All that’s about to change. IoT systems and platforms have seen a 3X increase in adoption in just four years, fueled by the need to improve production flow monitoring, facility management, predictive maintenance including Maintenance, Repair and Overhaul (MRO), logistics, supply chain automation and more, manufacturers are adopting IoT to digitally transform their businesses. DBS Research estimates that IoT spending in manufacturing is projected to see a 4X increase by 2020 over 2015 levels, reaching $48B by 2020. The following graphic compares IoT spending in Manufacturing, Transport and Logistics, Energy, Utilities & Natural Resources, Healthcare and Retail.

The quickest wins from digitally transforming manufacturing are already being accomplished in automotive, discrete and process production centers today.  Improving environmental monitoring, smart metering across all machinery on the shop floor, inventory intelligence, and improved Warehouse Management Systems (WMS) enable manufacturers to manage product configurations over their entire lifecycles.

The following is a distribution of IoT use cases by benefits and payback period of investments from Capgemini

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