What's Behind IoT's Supply and Demand?

By Special Guest
Nayaki Nayyar, GM and Global Head of IoT and Innovation GTM, SAP
June 01, 2016

Industry 4.0 and smart factories have caught the imagination of manufacturers. The promise of the Internet of Things (IoT) and digitizing internal processes gives hope to companies that spent the last few decades cutting labor costs and increasing efficiencies throughout their organizations. When manufacturers see analyst forecasts predict increases in revenues by 23 percent and productivity by 26 percent, IoT is impossible to ignore.

Eighty percent of manufacturers are preparing for changes to their business model, and everyone wants to understand the impact of IoT on business. The early results are in, and they are positive. Even in this initial stage, IoT is proving that its value is more than connecting devices. IoT delivers tangible business outcomes that are changing how manufacturers do business.

IoT Pumps Fresh Air Into Kaeser Compressors
Breathing new life into the business model of a 97-year-old company isn’t easy, but it’s possible with IoT. Kaeser Compressors, a German-based manufacturer of air system products, is reinventing itself from a single-play product manufacturer to a multi-play solution provider that sells compressed air as a service.

Throughout its lifetime, Kaeser excelled at manufacturing air compressors, and had a loyal list of industrial and non-industrial global customers across aerospace, automotive, utilities and more.  A few years ago, Kaeser began automating its systems and enabling data transfers throughout its manufacturing process to reduce maintenance costs and equipment downtime. It currently collects more than a million measurements each day over IoT.

Collecting the measurements is important, but the real value is in being able to sift through all the data and make smart decisions. Kaeser implemented predictive maintenance to help determine when equipment needed to be replaced or was not working properly. After experiencing the benefits of predictive maintenance internally, Kaeser started investigating the possibility of selling compressed air as a service and using IoT and predictive analytics to monitor the equipment. Compressed air as a service soon became a reality and a popular offering among customers.

Temperature, pressure level, delivered air, and machine status are among the millions of measurements Kaeser collects to understand customers’ power consumption, operational availability, as well as the safety and quality of the compressed air. Kaeser service personnel rely on predictive analysis to recognize usage patterns and monitor machine health. The added service offering is generating new revenue and is forecast to increase annually. While financials are always great proof points, Kaeser is most proud of the stream of high marks the company is earning from customers for excellent service, which is a constant focus for the company.

Harley-Davidson Hits the Road with IoT
At Harley-Davidson, IoT introduced an easy flow for custom orders and a personalized, one-of-a-kind customer experience that has been impossible for manufacturers until now. The motorcycle manufacturer began modernizing its shop floor and digitizing operations in 2009, and the journey started with integrating its back-end systems. ERP, supply chain, profit-loss management, and manufacturing are integrated directly to the company’s different plants and provide a clear picture of the business to managers located locally at headquarters and remotely at plants.

On the shop floor, motorcycle parts have RFID chips that identify their work requirements for the bill of materials. As the parts move along the assembly line, a manufacturing engine reads the chips, which store information such as the bike’s vehicle identification number (VIN). The engine matches the VIN to the build requirements, and the parts move steadily along the assembly line completing each step of the build.

In the Harley-Davidson showrooms, customers can choose from what’s available or build their own specialized bike based on their favorite paint color, frame design, and gas tank size. Dealers connect online to the ordering system, and customers design their dream bikes.  Once the selections are made, the custom order is routed directly to the manufacturer to build.

Digitizing the manufacturing and adopting IoT has transformed Harley-Davidson, with the single biggest change being the speed of order fulfillment. Harley-Davidson moved from a fixed, 21-day production schedule for new orders down to only six hours.

IoT Cleans Up QA at Carpet Manufacturer
Manufacturers constantly hone their quality assurance process. For QA, details count but they can be overwhelming to humans. IoT provides creative options for tracking the manufacturing process and monitoring it efficiently. IoT platforms can easily capture, track and analyze data to maintain QA and help meet compliance requirements.   

Mohawk Manufacturing, a Georgia-based flooring manufacturer, implemented IoT into its equipment and analytics to track the dying process of its carpets. When carpet rolls came off one of the two manufacturing lines, Mohawk could not track if the dyes had set correctly. Mohawk added IoT sensors and tags to every piece of equipment, and the sensors detect data and transfer it for analysis.

When anomalies pop up, Mohawk can proactively investigate the shop floor, detect problems and make the necessary adjustments before it’s too late. Mohawk is finding the root causes of production issues through the IoT data and predictive analysis, and the knowledge is saving Mohawk $6 to $7 million dollars.

The Floor of the Future
Science fiction writers have always imagined a future of robots, and bots are already prominent contributors within manufacturers. Automobile makers are the top users, and the trend is expanding into metals, consumer goods and electronics manufacturers. In the coming years, automation will advance until we see few humans in smart plants, and the organization will be integrated from the shop floor to the top floor. The manufacturer of the future will be able to share data and interact more easily and in sync regardless of distance or distributed resources.

Ordering will be based on ambient intelligence that depends on regional supply and demand and adjusts automatically. The distance between the customer and the manufacturer will be miniscule, as orders will go from mobile phone to the shop floor without human intervention. Instead of a manager making decisions about the day-to-day plan, robots will respond to incoming, real-time or near real time data from consumers.

Even maintenance plans and service policies will change. Let’s say a washing machine manufacturer adds sensors to its parts. These sensors will transmit data about vibration, temperature, and time in use on a weekly basis to the manufacturer. And, similar to the ways many newer cars let the owner know the tire pressure is low or the oil needs changing, manufacturers will alert owners of upcoming maintenance needs. Once again, this reduces the need for a human to visit a customer’s home and investigate the problem.

Machines and bots will be prominent in the future smart factory and manufacturers will place a premium on the humans that understand how to get the most out of the data arriving from IoT. Manufacturers that can adapt to business outcomes based on data will find themselves closer to their end customer, more responsive to market fluctuations and able to respond more effectively to upstream and downstream supply and demand.       

About the author: Nayaki Nayyar is General Manager and Global Head of IoT and Innovation GTM at SAP. During her 20 year career, Nayaki has held various leadership positions at SAP and in the Industry. In her most recent  role, she led the product development organization for SAP’s Cloud for Customer product—comprised of sales, service, and social capabilities—and significantly grew the business over 10 quarters.

Edited by Ken Briodagh

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