What Does IIoT Mean for Smaller Manufacturers?

​A conference session helmed by ARC Advisory Group at the IoT Asia 2015 conference and exhibition held earlier this month in Singapore provided an opportunity to assess how the Industrial Internet of Things plays in the hearts and minds of small and medium enterprises (SMEs).

Is IIoT something that they understand and are familiar with? Where are the key opportunities and what are the benefits? What's the best way to get started? These were among the questions discussed by a panel of Singapore-based end users and suppliers of IIoT technology.

Although Singapore is well known for its success in attracting global, brand name companies to set up operations, it's also home to over 150,000 small and medium enterprises (defined as having less than 200 staff), which together employ 70 percent of the workforce, contribute 50 percent of GDP, and account for 99 percent of all companies in the country.

Latterly, faced with tighter restrictions on foreign labor and rising costs, SMEs are being encouraged by the government to adopt productivity-enhancing technologies in their operations, and there are generous grants and tax incentives available for doing so. The Singapore government is itself championing the Internet of Things through its Smart Nation initiative.

A summary of the main issues and learnings from the "Perspectives on Adopting IoT in the Manufacturing Sectors" conference session at IoT Asia follows.

Why should SME manufacturing companies take an interest in the Industrial Internet of Things?

IIoT should not be thought of as  something only relevant to larger manufacturers. There are many aspects of the daily operations in the typical SME that are ripe for the type of improvements provided by IIoT technology. And there are increasingly affordable solutions that can deliver tangible benefits with a fast return on investment.      

Where should manufacturers look to apply IIoT in their operations?

Look for where you have the most inefficiencies. How? Walk around your facility, talk to your operators, identify laborious manual processes such as pen-and-paper data collection and Excel spreadsheet data entry tasks. Think about how where you could install sensors to e.g. monitor the temperature of a baking oven or detect the opening of a machine door. Sensing devices are getting cheaper, and instrumenting equipment is the first step to getting enhanced levels of information from the plant and enabling applications such as remote monitoring and production and reliability analysis.

I have a good idea for an IIoT project but how can I best justify that investment to management?

It is easy for an SME to be overwhelmed with the number of things it can do with IIoT and go overboard with a costly and complex project. So you need to be absolutely focused on whether the project will enable cost reduction and quality improvement. If so, you should get the green light because these two aspects have a direct impact on what you do as a manufacturer. If it's just something that is "nice to have" and the ROI cannot be clearly articulated, it is likely to be a tougher sell in the typical Singapore SME, which is very cost conscious. For the smaller SME, a top-down approach with executive management or the owner championing or fully subscribing to IIoT may be necessary.

What are the barriers to wider IIoT adoption in the SME community?

Manufacturing can be a conservative industry, perhaps more so for smaller companies faced with tackling day-to-day issues and with insufficient resources to survey new technologies and plan improvement projects. Even if a company is doing well, there's the "if it's not broken don't fix it" mentality, which can impede investment in new technologies. This is dangerous because there's always going to be competitors at your back trying to beat you on cost, quality, delivery, etc., and so when something like IIoT comes along, SMEs need to be open minded and curious about how it can potentially  enable them to stay a step ahead of the competition. In addition, undoubtedly, financial issues and unclear benefits are factors in delaying adoption: Will this IIoT technology be a lot cheaper next year? Do I have the skills in-house to manage the implementation? How much will this system cost to maintain?

For a manufacturer just starting out its IIoT journey, where to go for information and advice?

With IoT being the latest buzzword, it's not hard to find information. But with the concept being attached to everything from connected cars to connected healthcare, it's important to look for sources that are familiar with industrial operations and the specific needs of manufacturers. Technology suppliers, research institutions (such as Singapore's Institute for Infocomm Research), industry associations (such as the Singapore Industrial Automation Association), and industry events (such as IoT Asia) can all help the smaller manufacturer learn about available solutions, implement pilot projects, and network with like-minded companies.       

Business model innovation is often talked about in the context of IIoT. Is this a realistic goal for the typical SME manufacturer?

It is good to think about and consider how, for example, IIoT is enabling ex-factory revenue models. But the reality, especially for SMEs, is that this is a process not a big bang. You need to get the foundations in place by first gaining visibility of the production floor and then take it from there, one step at a time. This is far better than going out and buying all this fantastic technology and expecting it to revolutionize your business overnight. So keep business model innovation as a worthwhile, long term goal and focus on what is practical and achievable right now.     

So there you are. The Industrial Internet of Things is not solely the preserve of large manufacturers like General Electric or Airbus, and you don't need to be Cisco or IBM sized in order to play a part as a technology supplier. For the smaller manufacturer, it's essential to intimately understand your operations so that you can identify inefficiencies. Start small with a project that you can implement fairly easily and can justify with relatively quick dollars-and-cents returns. Take advantage of ARC research and analysis and the many sources of information and advice out there on IIoT. And while innovating your business model may be a step too far at the moment, there is IIoT technology available right now – with increasingly lower cost components and standardized solutions – that can help deliver real improvements to your operations.