Manufacturing IoT: Use cases and ROI – Part I


I belong to a CEO growth group in Charlotte NC, where I live. Our members are alumni of Goldman Sachs 10,000 Small Businesses program. We meet monthly to share and learn from one anothers’ experiences and knowledge.

At the last meeting, I was asked by one of my peers:

“What is Mariner’s specialization?”

I replied: “Internet of things (IoT) for midmarket discrete and process manufacturers nationally.”

He replied: “But IoT is such a broad term, what do you do specifically?”

Of course, he was right. IoT is a broad term, so I thought a blog post articulating Mariner’s perspective on IoT as it applies to our market is a good use of blogspace.

At the most fundamental level, there are two IoT application scenarios for Manufacturers: saving money with IoT and making money with IoT. Let’s explore them more closely.

Save Money with IoT
The Connected Factory Scenario

Cost savings is a worthy goal, though I’m often reminded of a quote from a mentor of mine. “No one every cost controlled their way to glory.” How true, but there’s a reason for all the hype around IoT: there is so much money to be saved in a factory that someone may very well cost control their way to glory! When a piece of industrial equipment costs millions of dollars, a few hours of unplanned downtime represents and enormous amount of money sucked away from the bottom line. This is the reason why we have seen a number of companies discussing their Connected Factory IoT plans with us. It also represents the best first use case for applying IoT to save money: Remote Monitoring.

All other use cases are dependent upon first being able to attach equipment sensors and collect information. For Mariner, Remote Monitoring also means setting thresholds for device readings to permit alerting appropriate people when those thresholds are exceeded. We watch your devices so you don’t have to.

How is this money saving, you might ask? There are many situations in a factory where knowing something sooner rather than later can save money. And while much is written about predictive maintenance, which can be quite complex and require loads of historical data, condition-based maintenance can be applied at this stage. Take an industrial pump as an example. Pumps have many moving parts and seals. They are subjected to heat, vibration that can cause failures. Sensors measuring the heat and vibration around bearings or sensors measure leaks around mechanical seals can alert maintenance of problems well ahead of unplanned downtime, all without the need for data science.  Remote monitoring can provide enormous return on investment, sometimes withMake Money Save Money with IOT in Manufacturingin weeks or a few months. Start here if you don’t know where to start.

Make Money with IoT
The Connected Product Scenario

There may be alternative ways for manufacturers to make money with IoT; Mariner is focusing on one specific scenario called “Connected Product.” Our focus is on manufacturers of discrete devices, both industrial devices and medical devices. By connecting sensors to their discrete products, Manufacturers open up the opportunity to “servitize” their products. According to Andy Neely, Head of the Institute of Manufacturing at Cambridge University, “. . . developing the capabilities they need to provide services and solutions that supplement their traditional product offerings.” If a manufacturer equips their product with sensors to collect usage data, they can then stream the data into Microsoft’s Azure cloud to permit providing their customer with remote monitoring services. This remote monitoring service can then be offered to their customers for a monthly recurring revenue stream. Added benefits to this revenue stream include:

  • Reducing customer acquisition costs by providing a full-service product
  • Improving customer retention rates
  • Improving product engineering by analyzing usage data

Some manufacturers of discrete products are taking this concept a step further and creating equipment-as-a-service (XaaS) revenue models. For their customers, this eliminates CAPEX and replaces it with a consumption based OPEX cost model. While adoption is reportedly slow, it is beginning to gain favor as IoT has become more widely accepted and adopted.

Clearly, I have only scratched the surface on “Connected Factory” and “Connected Product”. Join me for next week’s blogpost where I will discuss other ways of saving or making money with IoT in manufacturing. I’ll also toss in a customer story or two.

 

Phil Morris
There's nothing Phil enjoys more than helping customers create game-changing solutions to their business problems. He's especially enthusiastic about developing digital business programs that converge business strategy with digital technology to improve customer experience, optimize business operations and develop new business models. Phil is happiest when he's meeting with customers, listening to their stories and digging in and helping. Phil oversees the strategy, business development and finance departments at Mariner, staying focused on new trends in business and technology. Away from the office, he enjoys spending time with his wife, kids and grand kids, crafting award-winning beer and playing guitar in a blues band.
Phil Morris

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