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Posted on 8/16/2017

IIoT: Manufacturing at the Speed of Change

Elliot Forsyth

Introduction

The digitalization of business across all industries is happening rapidly, and there is no going back.  Imagine knowing when a machine is about to fail before it actually occurs.  Or what if it were possible to monitor a customer's product performance in real time to service it more quickly and efficiently?

Companies are looking for new ways to deliver value to their customers using digital channels and creating personalized, digitally enabled products across all sectors, from consumer products to heavy equipment and machinery.  However, it is wise not to be shortsighted.  Start with a strategic perspective by aligning with the strategic levers that will drive success for your business.

The value of digitization for companies lies in two strategic drivers:

  1. Bottom-line cost savings through more efficient and effective digitally enabled processes, and
  2. Top-line growth through better solutions that are digitally enabled and more differentiated

The Industrial Internet of Things (IIoT) is bringing more intelligence to manufacturing operations that enables them to be more competitive and improve efficiencies.  IIoT involves the use of sensing technologies and other devices that can connect and transmit information about machines and other objects. 

In a recent study, Cisco estimated that the Industrial Internet of Things will create $14.4 trillion of value by 2020.  But what does that mean for the manufacturing segments in Michigan, specifically?

To answer this question, we need to look at the special role of manufacturers in the digitization of business across industries:

  1. First, they provide the digitally enabled machinery, vehicles, buildings, and equipment so that other companies can innovate their businesses.
  2. They are spearheading innovative processes themselves, leveraging the digital capabilities of the equipment they use.

Reimagine Business Processes

The next evolution of business models for industrial machinery and components is being driven by digitally connected equipment combined with business data and third-party information to provide new service models, such as equipment as a service, value-added software applications, and digital orchestration of the entire value network (supply chain) for selling customer-specific solutions.

In the digitalized world, business processes must go beyond internal and external boundaries.  New digitally enabled product characteristics that are sold through new business models require companies to reimagine the fundamental processes across all lines of business.

Collaborative Design

Traditional product development is focused too often on the product itself.  In a digitalized world, collaborative engineering processes that merge mechanical, electrical, and software developments inside organizations and with external engineering partners are key.  Further, product design processes that leverage the digital capabilities such as IIoT need to be developed in close cooperation with the design of new business models in sales and service.

Digitalization of business in not only a reality…digital technologies also are evolving at a speed like never before. (To see what this might look like, watch this video:  https://www.youtube.com/watch?v=EMdXj9qFr4M)

Customer Engagement

Through digitalization, companies face an acceleration in the trend from selling discrete products to selling end-to-end solutions with a life-long performance promise to their customers.  Sales processes must be redesigned, considering the increased expectations of the customer and also to sell bundled products, software, services and technologies.  This is often a new way of engaging , not only with customers and partners but also as an extended collaboration between the manufacturer and its key suppliers.

Solution selling and usage-based billing

More than ever, manufacturers have insight and influence into the operation of their products.  New revenue models that use digital capabilities such as IIoT allow their customers to consume products as a service rather than buying a product.  Business processes in this area go beyond the point of sale to expand into a lifetime relationship where performance consumption is measured and subsequently billed to customers.

Predictive maintenance and service

In a digitalized business, the sale of a product is just the beginning, and it may deliver no profit at that time.  The aftermarket in industrial products could become the profit maker; in traditional sales models, the aftermarket is seen as a "nice-to-have" business.  Consider new business processes that leverage digital innovations and are integrated across lines of business.

Manufacturers that reimagine their business in a digitalized world will see their profits come or go in the aftermarket.  Any inefficiency in the aftermarket processes, product performance issues, or failures will devour their margins.  Leveraging IIoT technologies enables companies to secure their business such as through predictive maintenance and service or emerging issue detection.

Cyber Risks as Technology Adoption Grows

The increasing use of digitalization, including IIoT-enabled devises, is leaving manufacturers vulnerable to more IT security risks.  With more than 20 billion connected things expected to be in use by 2020, you can be sure that cyber-attacks will only escalate.  Manufacturers may be more at risk than other industries due to the systems in industrial environments being perceived as weak by attackers because they are not held to compliance standards, according to an IBM report.  Specifically, more than 25% of identified attacks in enterprises will involve IIoT by 2020.

To demonstrate this point FireEye Security Services reports that manufacturing is a Top 5 most attacked industry.  As manufacturing becomes more and more of a connected industry, there are more and more potential points to attack.

Manufacturers must take preventative measures to reduce their risk potential.  An effective solution is to adopt the National Institute of Standards and Technology (NIST) Cyber Security Framework which is a simple five step process:

  • Identify – Know your assets
  • Protect – Limit the damage
  • Detect – Find the bad actors
  • Respond – Hunt the bad actors and expel
  • Recover – Get back to a normal state

NIST plays a leading role in providing guidance on cybersecurity measures that are useful and beneficial for manufacturers. More information about the NIST Framework will be in the next Blog.

About the Author

Elliot Forsyth | Michigan Manufacturing Technology Center

Elliot Forsyth is Vice President of Business Operations at the Michigan Manufacturing Technology Center (The Center) where he is responsible for leading practice areas that include cybersecurity, technology acceleration, marketing, market research and business development.

The Center plays a lead role in coordinating and streamlining technology-related services to Michigan’s established industries and in assisting businesses to diversify into new and under-served markets.

As a National Institute for Standards and Technology (NIST) affiliate, The Center has developed a state-of-the-art cybersecurity service for companies in the defense, aerospace and automotive industries. Over the past two years, Elliot led this effort and expanded his expertise in cybersecurity, supporting Michigan companies to safeguard their businesses and maintain regulatory compliance. As a result, Elliot has been quoted and interviewed by print, broadcast and online media outlets, as well as presenting at numerous conferences and events.

Prior to joining The Center, Elliot spent more than 20 years gaining broad, global business experience in high tech and manufacturing companies. He has a proven track record and practiced methodologies to transform global corporations for high growth and profitability.

To read Elliot’s full bio, click here.

 
 

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