How IoT can build additional revenue streams for discrete manufacturers

If you speak to any discrete manufacturer, they will tell you that it’s getting even tougher to stand out to prospects and even their own customers with traditional product/service offerings.

While there are many ways to differentiate – with innovation sitting firmly at the heart – it’s a challenge with the pace that many manufacturers are working at just to keep up with their orders.

As one innovation leads to another, we find ourselves in a time of the Internet of Things, machine learning and advanced analytics where opportunities for continued innovation and development are better than ever.

IoT for discrete manufacturing

The advancement in sensors, devices, connectivity, machines and data insights have created a powerful combination that can unlock business value, drive innovation and take discrete manufacturing business to greater heights than ever before.

With the Internet of Things, discrete manufacturers have the ability to innovate in all areas of business, from the factory floor, through the supply and demand chain to product development and after sale service.

Manufacturers capitalizing on IoT benefits

Kuka Systems Group is a great example of a manufacturer who took advantage of the Internet of Things, creating a highly automated plant that connects as many as 60,000 devices and robots to a central data-management system.

With a streamlined management environment, the system is able to adapt quickly to changes in production requirements, and powerful new access to data allows KUKA to drive actionable insights into factory operations.

“We ship our customer a complete car body every 77 seconds,” explained Jake Ladouceur, managing director, KUKA Systems Group Toledo facility. “We don’t have time to adjust source code, and we can’t introduce something that isn’t trusted and proven. Our intelligent system built with Microsoft technology enables us to react very quickly.”

Opportunities for revenue growth

In addition to the key areas mentioned above where IoT can unlock value, it also has the ability to transform business models, providing new opportunities for revenue growth.

Today, selling a product to a customer is just the beginning of an ongoing, mutually beneficial relationship when a robust after-sale subscription based service program – using the Internet of Things – is established.

By harnessing the capabilities of IoT, you are differentiating, and delivering greater value to your customers by using data that helps you to understand maintenance requirements, new product opportunities and product improvement needs.

Becoming a consulting manufacturer

As a discrete manufacturer, you’re not typically seen as a consultant, but when you understand your customers patterns and needs, and you have access to data, you can help them to improve their processes and operations.

Using a software-licensing model, you can easily offer product enhancements through software updates and charge for the enhanced functionality based on a software maintenance and updates.

There are opportunities to charge for new levels of software support while simultaneously delivering a better customer experience too. As software allows for flexible product configurations, you can quickly, easily, and inexpensively package and price their devices to uniquely address new, emerging, or niche markets that would previously have been impractical or prohibitive due to costs.

The benefits of IoT

The benefits of using the Internet of Things in discrete manufacturing doesn’t just stop at building additional or alternative revenue streams. Further benefits of IoT include:

  • Reducing manufacturing and distribution costs
  • Product life extension
  • Maximizing the use of manufacturing assets
  • Increased customer loyalty and satisfaction
  • Improving time-to-market

The discrete manufacturing series

Our series focuses on five common problems discrete manufacturers are currently facing, and how to solve them, including case study examples of where discrete manufacturers have implemented our solutions and seen success. The full series includes tip sheets – available for download – on:

A guide to solving compliance problems for discrete manufacturers

Non-compliance has the ability to destroy the reputation of any company, and its balance sheet, overnight.

Manufacturers are trying their best to combat challenges from low cost overseas competitors, by rising up the value chain and embracing the demand for higher quality standards.

Manufacturers are under greater pressure than at any time in history; trying to meet the ever-higher quality standards of their blue-chip customers, while fighting off competitors from low-wage offshore locations – and staying afloat in a stagnant economy.

Unsurprisingly some companies are buckling under the strain, especially as their compliance burden grows. After all, “every company is just one bad decision or just one ‘bad employee’, away from scandal”.

Let’s take a look into how discrete manufacturers can effectively manage the problem of compliance:

Business Process Modeling

Innovations in supply chain management and reporting software have enabled manufacturing companies to achieve better compliance performance through enhanced certification and specification tracking procedures. Working with your suppliers, the crucial information can be transmitted electronically, and then sorted, organized, and filed according to shipment dates and parts numbers.

Documenting these business processes should be done with a tight reference to IT systems, and needs to not only include the processes themselves, but also how system security and data audit is management, software such as Columbus Rapid Value, and Dynamic Security Management can help you to check those boxes.

Version control is also critical for ensuring that changes are managed and published correctly.

Quality management

A major concern of discrete manufacturers is that defects can take years to surface. With the need to continually release new models to stay competitive and satisfy customer demands, managing defects plays a significant role in the ability to stay competitive and profitable.

Quality management is key to a manufacturers’ ability to respond more effectively in product recall situations, ensuring consumer safety and mitigating risk and litigation exposure.

Processes must also include the appropriate control points to ensure that quality of materials, conversion processes and finished goods are as expected. Where a non-conformance is identified, root cause analysis needs to take place and corrective actions initiated and managed through to conclusion. This process can be supported by having full supply chain visibility and therefore being able to trace back to the start of the operation.

Traceability

The key purpose of traceable manufacturing is its ability to help manufacturers easily determine when a problem occurred and its associated details. It takes two forms. The first is known as product tracking, which is the capability to follow the path of a specified unit of a product through the supply chain as it moves between organizations. Products are routinely tracked for obsolescence, inventory management, and logistical purposes.

The second form, product tracing, is the capability to identify the origin of a particular unit and/or batch of product located within the supply chain by reference to records held upstream in the supply chain. Batch segregation helps in sorting out problems because when you determine which batch is bad, you only have to get rid of that single batch rather than destroying all of the products. This helps companies save on resources.

Traceability is another key component to maintaining compliance with manufacturing regulations.

How ERP can help

Admittedly such a project will take time, effort, finance and a genuine partnership with the correct software developer – as different manufacturers will require different solutions, and each niche industrial sector will have different regulatory and compliance challenges.

However, “an integrated ERP system … will give you the necessary support in adhering to the regulations, will not slow you down, but will free you to concentrate on manufacturing” says David J Caruso, a long-time specialist in manufacturing, supply chain and technology transformation strategies. Caruso has worked on ERP implementations for global brands such as Johnson & Johnson, Sun Microsystems, Rolls-Royce Motors and American Standard.

Learn more about how ERP can help to solve common discrete manufacturing problems, such as managing compliance by taking a look at our discrete manufacturing series below.

The discrete manufacturing series

Our series focuses on five common problems discrete manufacturers are currently facing, and how to solve them, including case study examples of where discrete manufacturers have implemented our solutions and seen success. The full series includes tip sheets – available for download – on:

How manufacturers can build additional revenue streams

How manufacturers can improve time-to-market

How to successfully manage mixed-mode manufacturing

How manufacturers can maximize the use of assets

How manufacturers can manage compliance effectively

5 reasons discrete manufacturers struggle to maximize the use of assets

Discrete manufacturers struggle to maximize the use of assets

Yet again, the discrete manufacturing industry is under pressure. With increased competition and a more demanding customer base forcing many manufacturers to look for new ways to increase their bottom line, it’s no surprise asset life extension is a popular topic.

Manufacturers can enhance their success by creating a proactive asset management culture, taking a more sophisticated approach to maintenance that optimizes asset performance and value. This is crucial for businesses to ensure that they can meet demand and reduce production costs.

Below are 5 common scenarios found in many discrete manufacturing organizations where maximizing the use of assets is a difficulty.

1. Reactive maintenance
Reactive maintenance is characterized by poor equipment performance, unpredictable breakdowns and ongoing minor plant stoppages. The poor condition of the equipment results in quality defects and stoppages, which in turn leads to unexpected production losses and overspend of the maintenance budget. Together, these can cause deficits that run into millions.

2. No proactive maintenance
When very little or no proactive maintenance exists, a “fire fighting” maintenance regime results, whereby temporary repairs or “band-aid” solutions are regularly applied to keep the equipment running.

3. Limited planning and scheduling
When planning and scheduling is reactive, it is often the planned activities that get dropped from the daily work schedule. Proactive strategies seem to be of little value to an organization struggling to meet the pressure to keep the plant running. It is hard to move into “asset management” mode and accurate equipment history is often not available.

4. Maintenance vs production mentality
When maintenance and production teams aren’t working together – or, worse, are in conflict – then any impetus for positive change soon dries up. Maintenance personnel are blamed for failures, morale is low and staff are too busy fixing things to conduct any inspections or preventative maintenance.

5. Lack of support
To improve asset performance, you need the strong support of leadership and management teams in order to stop the fire fighting and target long-term sustainable asset management. The journey must start at the top of the organization.

Good leadership is critical to the team’s overall success. Your leader should be able to articulate the common sense of purpose, and unite all members of the team so that you are working towards this purpose. The asset management team should be seen as a force to be reckoned with, yet should remain approachable and open. All site employees should be aware of the team’s existence and know how to contact them with any ongoing plant issues or frustrations.

How to successfully maximize the use of assets
The goal in improving asset performance is simple. To enhance the overall operations of the plant or facility and improve business performance.
More specifically, there are three key success factors for any asset improvement program:

Loss elimination
This involves tracking production losses and assets with high maintenance costs, and then finding ways to reduce those losses or high costs. Efforts should be focused on the largest and most critical opportunities.

Risk management
Better manage the risk of your strategic objectives in the areas of Health, Safety and Environment (HSE), quality, production and reputation. Common tools to identify and reduce risk include:
• FMEA – Failure modes and effects analysis
• FMECA – Failure modes, effects and criticality analysis
• VAA – Vulnerability assessment and analysis
• RCM – Reliability centered maintenance
• RBD – Reliability block diagram

Life cycle asset management
Studies show that as much as 95% of the total life cycle cost (LCC) of an asset is determined before it is put into use. With this in mind, the Reliability Engineer (if you have someone in this role) should be involved in the design and installation stages for new assets and modification of existing assets.

The discrete manufacturing series
Our series focuses on five common problems discrete manufacturers are currently facing, and how to solve them, including case study examples of where discrete manufacturers have implemented our solutions and seen success.

In our tip sheet ‘How manufacturers can maximize the use of assets’, we explain various steps that you can take to ensure you’re leveraging the use of existing assets to generate maximum ROI. You can download a copy of the tip sheet here.

For more information or to contact us visit Tridea Partners website.