For most manufacturers in the UK, the focus at this time is on the uncertainty surrounding the outcome of Brexit negotiations. Whilst this is understandable, it can also lead to a lack of strategic planning – especially when it comes to integrating the Internet of Things into their processes.
This includes a plethora of actuators, sensors, and even large-scale equipment as such those known as a CNC machine all of which are connected to the internet. In the process of connecting everything manufacturing is undergoing a massive change and with that in mind, here is an overview of what the Internet of Things (IoT) means for UK manufacturers.
One promise for IoT in manufacturing is the ability that the inclusion of cyber-physical systems means for productivity – not only in the manufacturing process but also in supply chain management. This includes processes which manage themselves such as companies like thyssenkrupp, their materials use automated tools to help with production.
Whilst this might sound like the stuff of science fiction, the reality is that many companies are already operating so-called ‘dark factories’ todays. These are factories which run with minimal human involved, hence the idea of not needing to turn on the lights.
This might sound exciting but for small and mid-sized manufacturers, the inevitability of IoT is can be daunting – especially when it comes to balancing the books. Whilst this technology sounds amazing, it does require investment. In fact, this is one reason why many IoT providers are shifting towards a SaaS (Software-as-a-Service) business model.
In doing so they are helping to reduce the capital needed to take advantage of the productivity gains of IoT technologies. This reduction in upfront cost will make it easier to upgrade equipment and, by extension, should help to drive bottom line growth in the face of uncertainty.
Logistics costs can add up over time. This not only includes the costs to ship raw materials and finished products but also the time and money spent on managing these processes. In fact, most manufacturers spend roughly 5 to 6 percent of their revenues on logistics costs.
As such, even a marginal improvement in supply chain costs can have impact on the bottom line. All of this without the costs associated with increasing turnover. But how is this possible?
For starters IoT in the supply will help customers and suppliers to figure out optimal replenishment schedules and this can lead to lower freight costs. Beyond this, IoT could give rise to M2M payments and this could help to smooth consignment processes used by manufacturers to keep their just in time production running smoothly.
Beyond this, IoT could help to make sense of what is bound to become a highly complicated logistics environment in the face of Brexit. This is due to the ability of sensors to provide real time data on the location of products in transit – especially those going through customs clearing processes. All of this could lead to better decision making on what to buy, where to buy it from, and home of ‘it’ to buy.
Ask any manufacturer and they will tell you the important of maintaining the availability of their equipment. Not only does this mean that they can operate their lines more efficiently but it also means that can lower the costs associated with maintenance and repairs – both of which can make or break a small manufacturer.
In addition, better running machines last longer and this saving on capital costs over time. For manufacturers this savings means a better return on equity, which then could amount to a higher valuation for their business.
When it comes to a post-Brexit world this spike in valuation could be deal, especially as companies on the continent look for access points in to the UK market.
Better, cheaper design
One constant struggle for manufacturers is figuring out how to the get the most from their research and development budget. For companies in industries with relatively short product lifecycles, getting their product development spend right is a big deal.
How can IoT help? It goes back the ability to implant sensors into the everything, which in turn can generate data about performance. All of this can be fed into algorithms to help determine optimal designs and production processes. This ability to achieve better, cheaper design will give manufacturers a much-needed boost as they try to stay ahead of competitors in Germany and China.
Whilst Brexit is looming the reality is that manufacturers need to focus on what they can control rather than the uncertainties at the Houses of Parliament. With that in mind, investments on IoT-related technologies should help UK manufacturers to extend their competitive advantages in 2019 and beyond.