Global Findings On IoT For Consumer Products

Don Gordon

The massive impact of Internet of Things (IoT) on consumer products is now beyond question, with more than 75 billion connected devices expected by 2025. That’s a significant change from 2017’s 8.4 billion IoT devices in use, which already represents an increase of 31% from 2016.

From iPhones to smart home devices like Nest and the Amazon Echo, IoT-enabled devices have captured people’s imaginations and wallets. But our brand-new study reveals that the IoT presents massive opportunities to consumer products companies in ways that are often unseen to consumers.

Currently, 60% of surveyed global manufacturers are implementing analytics on IoT data to optimize processes and production. But, as the study shows, this is just a small part of the picture. You can get a copy of our study here. However, these numbers have been mostly conjecture with regards to consumer products IoT.

Earlier this year, SAP conducted an in-depth international survey to create a more accurate overall picture. Our professionals received data from respondents in five countries in varying states of development. The individuals surveyed represent a wide range of consumer products industries and many different professional positions. Research demographics are available in the full study document. Here’s a short look at the results of this survey.

A common set of business challenges point to IoT

The top business challenge faced by these manufacturers were raw material cost fluctuation at 35%. This was followed by high logistics costs and shrinking operational margins, at 32% and 31%, respectively. After the top three, high lead time for products and inventory and the slow pace of innovation followed, at 28% each.

The top actions put in place to deal with these concerns were led by faster reaction to demand and capacity changes, at 32%. After this was improving product lead time and product quality and compliance, at 27% and 24%. Following this was focusing on more product innovation and increasing transport efficiencies, at 23% each. The compelling trend here is that many of these challenges are most hindering consumer products companies are areas where IoT has high potential to drive strong benefits.

Understanding and applying IoT technology

But why are they investing in IoT? The survey found that 41% of respondents have a clear picture of what IoT is and what it can do for their company. That still leaves a large number of respondents who know it is important but don’t have a strong grasp of IoT and the benefits it can provide. For overall reasons, having areas of applicability to the business and IoT’s potential value to their business top the list. But what areas are the companies planning on implementing first?

There are several key areas where implementation of IoT technology has been planned: Quality control came in at a high 61%. This suggests that this is the main driver for many businesses. After this: logistics management, distribution center management, inventory movement control, and transportation management.

The companies are taking several different approaches to implementing IoT into their operations. Key initiatives used include creating processes for managing IoT. Following that is training or acquiring IoT-capable staff, learning from early adopters’ actions, increasing budget, and building an organizational consensus.

Leaders and laggards

Leaders and laggards in this group tend to divide on several aspects. One aspect includes strategic drivers for companies implementing IoT into their supply chain. Leaders focus on improving product lead time, reacting to demand and capacity changes more quickly, and improving product quality and compliance. These aspects take a forward-focused approach. Laggards focus on decreasing out-of-stocks, improving cost-to-serve initiatives, and increasing product innovation. This shows a focus on catching up to market changes.

There was also a difference in implementing initiatives to improve IoT use. Leaders focus on creating IoT management processes, learning from early adopters and allocating more funds for the process. Though laggards also focus on creating IoT management processes, it is third on their list, after establishing partnerships to exploit IoT and building an organizational consensus of IoT technology implementation.

This survey helps to prove the potential of consumer products IoT. The results help us gain a stronger understanding of key issues with IoT implementation. We discovered that improving understanding of IoT capabilities needs to be addressed. Understanding allows companies to take advantage of IoT’s benefits. There were also many differences between countries, company sizes, and positions. More detailed information and many insights can be found in our original study report than can fit in this article. To take advantage of this information, download the full report.

By undertaking this survey, SAP has been able to assemble a large number of statistics that are specific to the consumer products IoT industry. As a leader in that industry, we believe it’s important to have accurate numbers to help consumer products companies move forward.  If you need help developing a comprehensive plan to bring IoT technology into your product line or company, please feel free to contact us today for more information.

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