The Internet of Things (IoT) involves connected products, assets, fleets, infrastructures, markets, and people. In this, the first in a series of blogs, we’ll look at connected products; future posts will address each aspect in turn.
From hairbrushes to trash cans, more products are being designed with built-in IoT sensors and Internet connections. But connected products are about more than just consumer packaged goods, and their benefits extend to more than just consumers.
Smart, connected products include everything from consumer-grade dishwashers to commercial-use vending machines to industrial-level drills. They enable manufacturers to offer new functionality or track performance and usage by end users. They allow retailers and service providers to monitor inventory levels or manage maintenance and repair. In all cases, the goal of connected products is to create an end-to-end solution that delivers new business value.
To achieve that goal, companies should look at connected products across three dimensions:
Goods and equipment
Connected products enable manufacturers and service providers to collect and analyze data on how products are being used. You can perform track-and-trace to identify the physical location of products. You can measure environmental factors such as temperature and humidity to ensure operating efficiency or predict failures. You can monitor actual usage for compliance with warranty terms or contractual agreements. And you can effectively replenish inventory to avoid stock-outs.
You can even leverage connected products for new business models. One SAP customer has envisioned transforming its business from manufacturing industrial drills to providing drilling services. So instead of merely selling drills, it would also lease drills and charge based on the number of holes drilled.
The company can already closely track usage of expensive industrial drill bits. One thing it discovered is that bits were being used on weekends, when customer factories were closed – revealing unauthorized usage. It anticipates saving millions of dollars in drill-bit misplacements and leakage.
IoT solves the disconnect between product engineering and actual usage in the field. Rather than guessing and waiting – guessing how end users are using products, waiting for feedback to filter in from the marketplace – engineering now gains instant insights.
By creating digital twins of your products, you can continuously and rapidly improve them, rolling out better designs or new functionality far faster than the competition. Digital twins also allow for better collaboration among teams, reuse of product and project data throughout the company, and even rapid and cost-effective mass customization. Some product enhancements can even be delivered in real time through over-the-air software upgrades.
Finally, connected products enable you to transform your supply networks. You can leverage a digital supply control tower and feed it with IoT data to control and respond to changing conditions such as inventory levels. You can also improve service quality by extending the supply chain into the business network.
Let’s say you manage vending machines with products from 10 vendors. In the past, planning for replenishment would be handled with Microsoft Excel files and separate procurement processes for each vendor. With IoT, you can automate replenishment by integrating procurement with the connected vending machines. You can achieve real-time visibility from the vending machines all the way back through your suppliers’ supply chains to avoid stock-outs and spoilages and deliver better customer service.
The key with all these dimensions is to start now. Identify high-value use cases, start small, and grow. IoT deployment is a journey, and as with any journey, there will be surprises along the way. It helps to identify a specific desired outcome of high value – reducing shrinkage, increasing uptime – and start there for faster return on investment. You can build on early successes toward achieving live engineering or new business models, leveraging connected products to transform your position in the marketplace.
Effective IoT connectedness requires a unifying foundation. SAP has addressed this need by introducing SAP Leonardo Internet of Things portfolio, innovative solutions designed to help organizations digitally transform existing processes and evolve to new digital models. Learn more by reading about real-world use cases, visiting sap.com/iot, attending our flagship event Leonardo Live this July 11–12 in Frankfurt, and following us on Twitter at @SAPLeonardo.