IoT and Smart Manufacturing: benefits and global opportunities

The Industry 4.0 factory promises to make manufacturing more efficient and sustainable than ever before. 

According to a PwC report, the industrial manufacturing industry spends around $318 billion/year on digital investments. This is especially impressive when compared to automotive and transportation ($112 billion) and high-tech and electronics ($172 billion).  

It’s clear to see why manufacturers that are slow to adopt new technologies, such as The Internet of Things (IoT) in manufacturing, will lose their competitive advantage. And while the Asia Pacific region, North America, and Europe are doing OK in this area, other regions need more investments and expertise to transform their operations. 

First, we’ll dive right into smart manufacturing powered by IoT, addressing benefits and use cases. Then, we’ll address solutions for a more equal development opportunity in the global manufacturing industry. 

What is smart manufacturing?

Smart manufacturing describes innovation and the technology that makes manufacturing more efficient. Some of its goals include automating repetitive tasks and a much more efficient manufacturing process. The key technologies are IoT (sensors collecting data), data processing (based on ML, AI) and analytics. 

The smart factory is not just a more modern reinvention of the traditional one. It’s a reimagining of what manufacturing can look like–intelligent devices (sensors, cameras, robots) connected through the internet and communicating with each other–across the entire supply chain. 

In the past, this data was nearly impossible to collect and understand. However, they are now a reality due to connectivity and data being easier to store and process. 

That’s why IoT plays a key role and has rapidly changed the manufacturing landscape. Now, data stored in the cloud is easily accessible, becoming a major competitive advantage.  

The global smart factory market size is expected to grow to $321.98 billion by 2032. 

The benefits of IoT in smart manufacturing

Without connected devices, there would be no smart manufacturing. Some of the most significant advantages are: 

Increased productivity 

Smart manufacturing helps with planning, optimising operations, monitoring objectives, identifying bottlenecks, solving problems quickly, predictive maintenance, and more. All of this contributes to 17-20% increase in productivity.  

Lower costs 

Equipment malfunctioning and downtime are expensive, so cutting costs should be a priority. Smart manufacturing also means making better decisions related to energy usage, which we also address in this article. 

So keep in mind that the initial investment is higher, but it will reduce operating costs in the long run. 

Faster time-to-market

IoT data lowers the time from concept to launch. As processes become more optimised—for example, automated scheduling and quality control—manufacturers will deliver the same or a higher quality product in less time. This also leads to increased customer satisfaction.

Sustainable production 

IoT solutions enable the development of more sustainable business models and production. Data helps reduce carbon footprint, gives energy savings a big boost, and helps save water and other finite resources. Moreover, it can aid in the process of product remanufacturing and recycling.  

Employee satisfaction

Smart manufacturing can help make the workplace environment safer and more productive, attracting top talent. Technology should assist employees in their work and eliminate repetitive tasks. However, there is a bigger advantage at play as it also can reduce workplace safety incidents through wearable devices. 

IoT and smart manufacturing: use cases

There are many examples of IoT in smart manufacturing. These are some of the most important use cases: 

1. Asset tracking 

With IoT, it’s much easier to keep track of assets and their exact location, including raw materials and finished goods. It’s also easier to optimise storage space and reduce costs when needed. 

For example, all inventory is tracked through a RIFD tag. When scanned, it accesses cloud data, meaning that you can quickly find the location of any item. Goods are grouped into categories and labelled according to location, availability, etc.

Managers can track changes in real time and make decisions just as quickly. Consequently, all operations will also run smoother, with fewer roadblocks slowing down production. 

2. Quality assurance 

Many things can malfunction during production, followed by safety and compliance issues. Moreover, smarter factories not only detect these but also ensure product quality. 

Sensors and cameras can monitor production lines and scan each item. If any anomaly is detected, they’ll automatically send an alert. Even better, you’ll see data related to strengths and weaknesses. For example, you might notice that older equipment may be the culprit behind quality issues, so replacement should be the priority. 

3. Supply chain optimisation 

One of the biggest challenges in manufacturing is the lack of supply chain transparency. This means that crucial data related to raw materials, shipments and inventory levels remain a mystery or are based on estimations. Moreover, it’s hard to anticipate bottlenecks such as low raw material levels from certain suppliers. 

It’s hard to imagine optimising supply chains without IoT data, which does the heavy lifting for you. 

4. Continuous process improvement 

Strategy and good decision-making go hand in hand. However, warehouse management can be like solving a list of never-ending tasks, with little time to change how you operate. 

Oftentimes, it’s challenging to understand what to prioritise as you need granular data on each manufacturing process. IoT allows warehouse managers to visualise schedules, plan ahead, fix issues and generally find suggestions for improvement. Also, as machinery becomes more intelligent, people will need to make fewer decisions. This is especially handy in situations where you need to act fast. 

5. Demand forecasting 

Depending on the industry, consumer trends can change quite fast. That’s why intelligent demand forecasting is needed. AI will most likely have a major impact, as it can analyse historical data, market trends and any other KPIs, such as production capacity.  

In this way, you’ll be able to predict demand much more accurately, reducing the need for unnecessary storage space or energy and time waste. 

6. Remote diagnostics

Diagnostics and troubleshooting are critical. However, you don’t necessarily need a team of experts on-call to predict or fix issues. IoT enables remote diagnostics by constantly monitoring equipment and detecting anomalies before they happen. 

It collects data such as noise, temperature, humidity, vibration, etc. The system will send alerts if any parameter goes above/below a certain limit. This way, some issues can be fixed remotely, and the support team will know when to intervene on-site. 

7. Product development

IoT devices can collect data on product usage and performance in the field. This is groundbreaking since this kind of information allows you to design new products and features. 

This kind of mass customisation is unprecedented. The biggest benefit is that it enables much better product development as companies will have insights into what their customers want. This includes more personalised products in a faster time-to-market. 

Challenges and opportunities in smart manufacturing: the South Africa case study 

As mentioned before, some areas have more opportunities and resources to adopt an Industry 4.0 manufacturing technology. And others, such as South Africa, have a lot of potential but need more domestic and international incentives to do so. 

South Africa manufacturing: Key facts and opportunities 

The manufacturing sector is the 4th largest in South Africa. Here are some key facts about EU and South Africa investment opportunities:

  • South Africa has a diverse manufacturing industry (automotive, mining, chemical etc.) and has an advanced economic infrastructure
  • In 2020, the total trade volume between the EU and South Africa was $38.2 billion
  • 31,8% of EU companies operate in manufacturing in the area

Another opportunity is that EU plans to boost trade with South Africa through the Global Gateway programme, a € 150 billion package to invest in clean energy, digitisation, transport, education and health. 

However, the South African manufacturing industry has some challenges as well. 

  • Keeping up with the global competition in a growingly complex manufacturing landscape
  • Challenges in replacing older equipment
  • Skills shortage and the need for reskilling/upskilling 
  • Switching from paper-based to digital processes 
  • Low automation 

According to PwC, investment in Industry 4.0 tech is still low. Additionally, companies with international funding are quicker to adopt smart manufacturing technologies. This is why collaboration will be key in solving some of the challenges of adopting IoT and other technologies in manufacturing. 

IoT and smart manufacturing: key takeaways

IoT in smart manufacturing has a lot of potential for growth all over the world. Here are our key takeaways:

  • Smart manufacturing is powered by innovative technology that makes manufacturing more efficient 
  • Some of the key technologies are IoT, data processing and analytics 
  • The benefits of IoT in smart manufacturing include increased productivity, lower costs, faster time-to-market and more sustainable production
  • There are many crucial use cases, such as asset tracking, quality assurance, demand forecasting and product development

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