IoT Adoption In The Consumer Products Industry: Regional Differences

Don Gordon

A recent IDC white paper asserts that the Internet of Things (IoT) is instrumental to many of the challenges facing the consumer products industry – in particular, the need to improve consumer engagement. Some early adopters are using IoT to streamline the supply chain and forge other operational improvements. At the same time, many companies are moving more cautiously toward adopting IoT capabilities and the new engagement models it makes possible. The pace and focus of IoT adoption also differ markedly from region to region.

The need to keep up with IoT

There is a shift in the consumer products industry created by companies using IoT and direct-to-consumer approaches. IoT-enabled digital transformation is changing the industry’s methods and business models, but not all companies are getting on board. Also, certain regions of the world are moving forward with IoT faster than others. The IDC white paper explains, “Sitting on the sidelines is a poor strategy given all the initiatives forward-looking companies are pursuing today. Consider that by 2018, nearly one-third of industry leaders will be disrupted by digitally enabled competitors.”

Adopting IoT can be very beneficial for consumer products companies across the world. It can improve the way they run their businesses and help them interact with customers and consumers. IoT can give companies a better idea of true consumer demand and new ways of effectively meeting them. For example, collecting real-time data can shape new product development. IoT can also help create better products and experiences for customers, such as solutions for keeping frozen foods in better condition, decreasing food spoilage, and customizing beverages to fit consumer preferences. Further, it could benefit developing countries with valuable cost savings and better profits.

Nonetheless, many companies are still not using IoT or not using it to its full potential, so differences emerge even within the same industry or region.

Regional differences in IoT intent and adoption

SAP-EKN research findings discovered some differences across regions, which included Germany, India, Japan, the United States, and the United Kingdom. The five countries surveyed showed differing viewpoints on the top challenges and the main strategic drivers they expect in the supply chain. This difference of opinion shows the need for solutions to be tailored to regions and companies.

Nonetheless, all five countries listed IoT as a top priority for quality control, with Germany, India, and Japan making it their highest priority. In the UK, it was tied with logistics management and transportation management, while in the U.S. it was second only to inventory movement control.

When rating different factors of IoT, India took the top spot for the most potential from IoT for business (65%), the most applicable areas to apply IoT (70%), and the best understanding of the concept (67%). Japan had the lowest percentages when rating these factors, from 20% to 23%. Germany, the U.S., and the UK also did not rate these factors high, with percentages ranging from 23% to 40%.

When it comes to adoption of IoT, an IDC market analysis explained that there are differences between developing and developed parts of the world. The analyst said, “IDC research into the regional macrolevel economic and social indicators for IoT adoption reveals a backdrop that is rich with broadband pervasiveness and government support in developed regions and eco-consciousness in developed and developing regions.”

It might not be a surprise that most of the currently installed IoT units (about 90%) are in developed regions. The analysis explained that developing nations prioritize other needs, such as healthcare infrastructure, over IoT, and have greater needs for things that form the foundation of IoT, such as establishing broadband.

Certain regions can also drive popularity (and revenue) of certain types of IoT-enabled products. For example, an article in Harvard Business Review noted Samsung’s expectation that the U.S., China, the UK, and Australia would move the smart-home device market forward. This market could include products like smart appliances and security cameras.

While your company might recognize the need to move forward with IoT, many others find this a challenge. Also, companies list different goals and struggles, depending on their region, which can be overcome with the help of companies that specialize in business uses of IoT.

Learn how to innovate at scale by incorporating individual innovations back to the core business to drive tangible business value by reading Accelerating Digital Transformation in Consumer Products. Explore how to bring Industry 4.0 insights into your business today by reading Industry 4.0: What’s Next?

About Don Gordon

Don Gordon leads global Consumer Products industry marketing for SAP. Previously he led global Retail industry marketing for IBM. He lives in Philadelphia, considered by many to be the finest city on earth.