What will happen to your factory if you neglect Industrial IoT?

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Industry 4.0 is taking off for a good reason.

Never before was the competition so fierce, the need to scale so burning due to fast growing demand. The world is a huge marketplace and manufacturers are required to boost their production rates, while all along continuing to reduce prices.

Manufacturers who manage to gain a competitive advantage leap forward and pave the way, while threatening the existence of the rest. In a world of consolidations and acquisitions, only a few leverage the entire demand.

Dignified manufacturers may find themselves looking at the fierce competition and not understanding what they are doing better. Better ROI rates or slight efficiency differences can change the entire picture. In a world of mass production, the smallest positive (or negative) margin trends can mean life or death for the manufacturer.

IIoT plays a major role in this game. Robust AI based IIoT solutions become the enabler for smart manufacturing and for surviving in this industry today.

Industry leaders seem to agree. In a recent survey that we conducted in partnership with SME, almost all respondents (93%) expect a single or double digit growth in demand over the next three years. The big question is how to increase production capacity without losing control or compromising product quality? It is clear to many manufacturers that the answer is going digital and applying IIoT technologies.

Click here for additional insights that were generated out of this survey  

We’ve gathered some more related indications:  

  • According to Business Insider‘s BI Intelligence, global manufacturers will invest $70 billion on IoT solutions in 2020. It was ‘only’ $29 billion in 2015.
  • According to a Cisco survey, 61% of 1,845 business and IT decision-makers who have implemented an IoT initiative believe ‘they have barely begun to scratch the surface of what IoT can do for their business’.

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  • Boston Consulting Group (BCG) predicts that by 2020, 50% of Internet of Things (IoT) spending will be driven by discrete manufacturing, transportation, logistics, and utilities industries.

That’s beyond a trend. Yet, not everybody is in. Understanding, exploring and onboarding IIoT takes effort and bares costs. Workers are buried under their everyday tasks, burning issues, loads of quick decisions to make and their personal lives. Not all of them spare the time to onboard IIoT nor do they invest time toנ fully learn about it.     

But, what will happen to manufacturers who keep burying their head in the sand? Failing to jump on the IIoT train can have severe consequences. Here are just a few examples:

Efficiency will fall short compared to the competitors

Manufacturers who aren’t leaning on IIoT may suffer from a relatively low OEE (Overall Equipment Effectiveness). According to IoT Analytics,  ‘Average OEEs run at 60-70%. Today’s world class OEEs are around 85%. That means that even the most effective factories today lose 15% of time on non-value-adding tasks like machine changeovers, stoppages, maintenance, and production of faulty products.’

That extra 15% (even more if you’re not part of the ‘most effective factories’ group) can change everything. Manufacturers use IIoT to reduce time to complete these tasks and improve quality.

Explore some real-life examples of how IIoT helps manufacturers boost their efficiency.

Meeting deadlines will not be feasible

While technology evolves and demands growth, the requirements for delivery times keep getting more strict and manufacturers are requested to be a lot faster, affecting the entire production cycle. Continuing to meet deadlines in the midst of growth may become impossible without IIoT.

You might have already started to notice this? … Customers are demanding a faster production pace. Why? Because they can. Competition sets the standards.  

How will IIoT support this demand? Well, imagine if you could spend less time tracking material, parts and tools, and less energy deliberating over big and small decisions you need to make. Imagine if you could quickly identify specific bottlenecks in certain workstations… Naturally you would have a better chance of meeting strict deadlines.

Also, there’s the cost. If your strategy towards meeting deadlines is to add a lot more employees to your workforce, the whole thing may become unprofitable (not to mention today’s challenge to hire high quality workers). IIoT let’s you speed up your production, at scale, without the need to expand your existing force.  

Rework and scrap will grow

A direct result of growing capacity and complexity is more rework and scrap. More finished parts end up disqualified during quality control (QC) processes while these parts are thrown away and hence the rework, the same parts need to be produced again (hopefully this time they pass QC) in order to fulfill the customer order.

IIoT solutions are designed to significantly reduce rework and scrap while improving profitability and efficiency.

Even the most efficient factories deal with scrap and rework, you know that. While the average percentage of scrap (scrap rate) has remained unclear, and rate changes are dependant on various factors, we all know that significant material or goods go to waste. For discrete manufacturers, where materials are very expensive, this means big losses. IIoT technologies help them avoid quality issues or discover them as they occur. The immediate result is reduction of scrap rates and rework significantly, hence cutting losses.

A known related use case is MFC Netform, a maker of components for the automotive industry, that uses an inspection system, along with IoT, to automatically reject a single part that doesn’t meet the quality standards. This scrapped part didn’t end up in the trash. On the contrary. The value of the part was calculated and multiplied by the number of similar scrapped units to quantify the value of scrap and make use of it.

As decision making overhead grows, wrong decisions will grow as well

If you ask me, one of the main industry 4.0 building blocks relates to the actionable insights and optimization support. Our article about AI based IIoT potential and how actionable insights driven by IIoT solutions demonstrate how a new standard for optimal decision making is being embraced these days.

East West Manufacturing described it well in their blog post dating back to 2016 that asked what will manufacturing look like in 2021:

Actionable Intelligence will become increasingly important because it will be impossible to anticipate and account for all of the environmental changes to which control systems will need to respond.”

Obviously, this comes down to money. You see, wrong decisions mean loss of money. But, we are humans. We all make wrong decisions all the time. As the problem becomes much more complex, the human ability to deal with it decreases. IIoT solutions, however, aren’t human. They consider hundreds and even thousands of parameters, plus probabilities that are calculated based on historical big data. We can never do such calculations alone.

Neglecting to use decision making support tools means losses.

A lot more personnel will be needed to manage the load and demand

To align with the rapidly changing industry standards, manufacturers hire ultra professional employees. These employees are expensive and hard to hire. The more such employees you need, the higher your operational costs will get. Another challenge is maintaining the extensive knowledge and experience of senior employees that are about to retire.

IIoT solutions help manufacturers control the number of high-cost employees they need, due to efficiency improvement and better automated decision making.

Also, professional employees will be hard to find for manufacturers that stick with old school work methods and fail to onboard new technologies. Employee standards are getting high as well. Attracting talent is not an easy task; you have to be up to date with the latest technologies, such as IIoT, cobots (collaborative robots) and so on, otherwise you’re considered old fashioned.

One last thing. Let’s talk about safety. People want to work in safe places. Safety is a burning issue among manufacturers, as it should be. IIoT leads to a whole new standard when it comes to employee safety, either by sensors, by allowing a hands free work process (using smart glasses), by alerting employers to the fact that a worker is working too many hours, or by using vibration sensors to sense when an unexpected movement is made.

Supply chain inefficiency

Industry 4 introduces new standards of transparency, accuracy, customization, engagement and more for supply chain collaboration.

Unfortunately, choosing not to join this revolution, or being fashionably late to the party, might have consequences for your collaborations, in many many ways.

You may end up selling higher priced products, your downtime will be higher while your OEE will be lower and you’ll have more recalls and quality issues. Also, you won’t be able to offer potential partners the same traceability of the product journey and transparency of product information, like a connected plant can.

Click here if you wish to learn more about the connection between IoT based optimization systems for smart manufacturing and successful supply chain collaborations  


Although there are still those reluctant to hop on the industry 4.0 train, it won’t be long before industry 5.0 will come knocking, as there are already whispers regarding the next industrial revolution. When that happens, those who neglected industry 4.0 will have a tough time bridging the gap, which might lead to their extinction.

You may think I’m over pessimistic, but history has taught us different. Those who embrace technology survive, those who hesitate usually don’t. That’s the natural course of things. Darwinism.  

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