How industrial IoT can strengthen the U.S. manufacturing industry

The far-reaching effects of globalization on the manufacturing industry in the United States — and those who work in it — are impossible to downplay. While certain sectors like pharmaceuticals, aerospace and electronics have surged, others have been slowly losing ground. By some estimates, the erosion of manufacturing in the U.S. has contributed two-thirds of the fall in labor’s share of U.S. gross domestic product, according to a recent report from the McKinsey Global Institute — with much of that hitting small and midsize manufacturers the hardest.

Even amidst that scene, the U.S. still accounts for 20% of the world’s manufacturing activity, McKinsey pointed out. Far from signaling a sort of slow demise of manufacturing in the U.S., a host of factors are coming together that can incite a U.S.-based manufacturing resurgence. In fact, the McKinsey report finds that the U.S. could boost annual manufacturing value added by up to $530 billion (20%) over current trends by 2025, and create more than 2 million jobs.

How can the U.S. achieve these targets? With Industry 4.0 technologies (IoT and related technologies) that will enable U.S.-based manufacturers to hone greater efficiencies in production, streamline labor costs and even lay the foundation for developing service-driven business models.

In many ways, manufacturers have been the earliest adopters of base IoT technologies — as operational technologies have for decades used sensors and RFID technology to automate supply chain management and ensure equipment health and safety. With the advent of new IoT technologies, the data from those machines and processes can be used in new ways to drive further efficiencies in asset management and the supply chain.

Taking a closer look, here are some ways industrial IoT technologies can help manufacturers:

Boost efficiencies by reducing downtime. Predictive maintenance is the single biggest driver for industrial IoT implementations. Enabling a piece of crucial equipment to “tell” a plant manager when it deviates from standard temperature or vibration parameters means the team can plan service before the equipment breaks down, potentially avoiding delays in production and all the ripple effects of associated costs. In more advanced scenarios, action can be automated all the way through ordering the parts and scheduling the work order to fix the issue long before it becomes a problem.

Enable remote monitoring and equipment maintenance. Gartner recently reported that nearly half of the 200 companies it surveyed either had digital twins — which use IoT technology to create a digital mirror of a physical asset — in use or were planning to implement them within the next year. The number of participating organizations launching digital twins will double in 2018, and by 2022, that number will triple. Digital twins enable manufacturers to accomplish two very important goals. They reduce the complexity inherent in industrial IoT development, which can require embedded programming skills not often in rich supply with traditional IT developers. And subsequently, digital twins can bridge the IT and OT worlds by building a digital thread, of sorts, which connects disparate systems to enable visibility and traceability.

Reduce energy consumption. U.S. manufacturing energy consumption increased between 2010 and 2014 for the first time in nearly a decade, according to data from the U.S Energy Information Administration. Equipping factories with smart thermostats and smart lights can enable cost savings, and further integrating unstructured data sources can bring even greater reductions in overhead costs. In a use case detailed by Cognizant, IoT-enabled HVAC systems also offer integrated weather data and prediction analysis to help manufacturers understand expenses and plan energy usage.

Training the next generation. With impending retirements of the most experienced workers, U.S.-based manufacturers will face the difficult challenge over the next decade of properly training the next generation for these crucial roles. Companies like Honeywell are working to marry IoT technologies with augmented reality to meet this need. In one technology solution, workers donning wearable sensors will collect data on their job as they move through it in real time, which will then be used to create immersive training and competency development.

By using IoT technologies, U.S.-based manufacturers can lead a data-driven manufacturing resurgence — gaining efficiencies in the way processes are currently managed and uncovering ideas on how to evolve those processes to meet the more service-driven business models the industry is moving toward. IoT enables better visibility into every aspect of the business — something that is crucial for seizing opportunities to digitally transform business models.

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