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    Tim Kannegieter


    Manufacturing is a key area of application of IoT world wide. McKinsey Global Institute said it is the industry with the highest potential for economic impact of IoT. IoT systems drive automation by collecting data to be processed and then act on decisions through robotic devices, completing the sensor to actuator loop. In addition, every single physical item in the manufacturing process can in theory be internet enabled, including raw materials, sub-components, machinery, transportation element etc. Each of these things will have information associated with it and the ability to communicate that with the wider IoT systems, both internal and external to the manufacturer. There will, potentially, be millions of things talking to each other. Interoperability across all organisations in the manufacturing value chain is a critical component in realising the full potential of IoT and this is enabled by reference architectures (see Standards below).

    A CSIRO study found that manufacturing companies generally do not have digital strategy, have only rudimentary eCommerce systems in place and are not looking to implement new business models enabled by digital technology, including the IoT. The major shift in business models is "servitisation", turning products into service opportunities. Many products will have maintenance or consumables replenishment, for example. A typical change of business model is to offer the product for free in return for a service contract. So there is a large opportunity in manufacturing to realise significant economic potential from the adoption of IoT technologies.

    However, the ICT landscape in Manufacturing is complicated as shown by the following diagram:


    Source: CSIRO

    In this landscape there are a number of ways in which IoT is relevant to manufacturing. For example, in Enterprise Resource Planning, IoT enables more and easier data collection/processing throughout the entire life cycle of products from design, manufacture and use in the field. Germany has a national plan to digitize 80% of its value chains by 2020 and IoT plays a key part of that through the Industrie 4.0 initiative (see below).

    A key constraint of driving uptake of IoT in Manufacturing is that 90% of all manufacturing companies have 30 employees or less. This inherently constrains their ability to understand the impact of IoT on their business and to invest in it.

    Relevant standards and regulations:

    Taking advantage of the IoT in manufacturing is a challenge due to the complicated landscape set out above. In order to address this, a number of international initiatives have emerged to enable organisations to collaborate in the development of reference architectures and approaches to realising the potential, as follows:

    • Industrie 4.0: This is an initiative led by the government of Germany to build on that country's strength in embedded systems. It's mainly a German initiative but due to the nature of global supply chains, it is gaining traction around the world through a number of government-to-goverment initiatives and the activity of leading German manufacturers.
    • Industrial Internet: This was initiated by GE in partnership with AT&T, CISCO, IBM and Intel and is now led by the US based Industrial Internet Consortium with hundreds of members. The Industrial internet spans all industries, not just manufacturing. Apart from a reference architecture, this group also facilitates the establishment of test beds. Test beds are collaborations of a variety of private companies wanting to test the viability of IoT products and applications in their industry. 
    • In Australia, the CSIRO is leading initiatives including i3 Hub and iManufacturing.

    Reportedly, Industrie 4.0 and IIC are working to make their reference architectures compatible.

    Sources: Information on this page was primarily sourced from:



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