Manufacturing companies are being driven by a number of impactful market trends affecting their business:
Expectations of global markets are causing companies to build production processes with greater agility and adaptability to respond to highly variable market demand
Massive amounts of data are being produced through social media channels
The globalization of the extended supply chain
Intelligence built into machines through sophisticated sensors and alert devices
In this blog, we will explore the impact of these factors as well as the evolution of technology that will fundamentally change the way manufacturing is done today and into the future.
Two major elements in the changing manufacturing environment — machine to machine (M2M) and Internet of Things (IOT) — will change the operational environment of the manufacturing firm. These concepts make up what is known as Industry 4.0 — the fourth Industrial Revolution, which describes the convergence of the classical manufacturing space with internet technologies and the increasing intelligence of devices.
How smart machines are affecting manufacturing
The concept of M2M integration in industrial applications shares enough similarities with IoT) that the terms are often used interchangeably, as both relate to the impact interconnected devices will have in both the industrial and consumer worlds.
A smart thermostat is a good example of how interconnected devices are gaining traction: It encompasses a number of key components, including mobility, social media, big data, cloud, and M2M self-regulation. Consumers can regulate the temperature in their residence remotely with a smartphone, link statistics to an app that calculates a green score rating, and share the results via social media. The device itself can detect and regulate anomalies, make recommendations, or send service alerts to the manufacturer.
In the industrial space, M2M is often thought of in the realm of preventive or predictive maintenance. For example, a device on a smart factory floor regulating itself for service to ensure constantly optimized production, allowing end users and process engineers to react to problems that have yet to occur.
Many companies in capital intensive manufacturing industries see the value in monitoring assets post-sale, providing feedback for internal management of the lifecycle of the product and to guarantee optimal availability and performance.
Manufacturers are embedding more intelligence and connectivity into both industrial and consumer products, allowing them to leverage their knowledge of the product to provide additional value-added services. It also enables them to transform their experience with the customer from a one-time transaction to an on-going relationship. This can provide a critical new source of revenue in aftermarket services or can completely change the manufacturers business model to one providing performance guarantees or even selling their product as a service.
Many SAP customers have teamed with us through co-innovation to engage in responsive manufacturing scenarios, so they are already familiar with M2M concepts and their promise. Their interest in Industry 4.0 is purely from a practical standpoint: How can it benefit them? What opportunities does it provide?
The tenets of Industry 4.0
Before answering those questions, let’s consider some of the key enablers and tenets of the fourth industrial revolution.Figure 1 depicts how many of the major enablers in enterprise technology today are indeed factors in creating this revolution. It is the combination of these elements that results in the massive changes we are seeing in manufacturing.
With the onset of Industry 4.0, a drastic increase in manufacturing complexity is going to occur. Organizations that start to think now about how to incorporate new innovations into manufacturing will have a distinct competitive advantage in the new Industrial Revolution. To learn more, visit www.sap.com/manufacturing.
This article originally appeared in the July 2014 issue of SAP Insider and was written by Mike Lackey, the Vice President of Solution Management for Line of Business Manufacturing.
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About Richard Howells
Richard Howells is a Vice President at SAP responsible for the positioning, messaging, AR , PR and go-to market activities for the SAP Supply Chain solutions.