IoT will streamline supply chain, reduce environmental impact

There’s a new Deloitte white paper that echoes a theme I’ve been repeating since 1990: smart businesses eliminate inefficiency by eliminating environmental waste.

I predict that the Internet of Things will speed that trend by allowing real-time data sharing throughout the supply chain, further increasing its efficiency.

The white paper, “The Evolving Supply Chain: Lean and Green,” says that:

“Leading companies are now finding that a green supply chain doesn’t just improve the public’s perception of their company and brand; it can save money by using resources more efficiently and reducing waste. It can also help to manage risk by insulating a company from shortages and price shocks, and by reducing the chances that a supplier will do something that gets them in hot water.”

It continues by identifying five key factors to reduce:

“Leading companies create value by modifying their supply chains to manage five key inputs and outputs: energy, carbon, water, materials and waste. These five resources are ubiquitous throughout the supply chain and thus offer vast potential for improved efficiency and cost reduction. Energy is expensive to use; carbon, in the form of emissions, represents dollars gone up in smoke; scarcity and commodity inflation are driving up the price of water and materials; and waste is a potential profit thrown away.”

In my speeches on the “Zero-Waste Economy,” I used to suggest that executives that were contemptuous of tree-hugging environmentalists and could care less about generating wastes should just substitute the work inefficiencies for waste. What hard-nosed company could justify inefficiency?

It’s great to see that the message is finally getting mainstream acceptance, and I really do think that the IoT will boost supply chain efficiency and thereby reduce environmental impacts by allowing everyone in the supply chain who needs operating data to share it simultaneously and in real time.

So there’s really no excuse any more for not practicing smart environmentalism, is there?

PS: To get the specifics about how to translate smart environmentalism into profits, check out Gil Friend’s Natural Logic. He’s got the operating manual.

Fewer, faster, finer: good values for #IoT innovators!

Just had a great conversation with a brilliant consultant, Michael Woody, the president and founder of International Marketing Advantages, Inc (he and I have the same wonderful literary agent, Michael Snell).

Woody helps small, innovative companies successfully compete with China, using a simple formula: fewer, faster, finer.

  • Fewer: think of China’s Foxcom, and its huge factory complexes and huge production runs. By contast, “American Dragon” companies ” lower minimum order sizes; the lower a minimum order size, the better. If a product can be customized, even better still.”

  • Faster: think about how far away China is, and how long it takes to ship products: “In today’s business environment of tighter margins, it is likely that your U.S. customers currently buying from China favor low inventory levels and just in time delivery. Given these conditions, short production lead times and physical proximity of supply chain partners becomes more critical.”
  • Finer: “…means not only that your product is of the highest quality, but also that it is safe. Overseas manufacturers, particularly those in China, have little to no understanding of the product safety regulations in the United States. Even large multi-national corporations, some based in the U.S, who have outsourced manufacturing to China are learning that lesson the hard way. These tougher regulations are your friend, so use them to your advantage.”

Check out the American Dragon site, and think hard on how to apply these principles in conjunction with your innovative Internet of Things product design, and I think you’ve got the formula for manufacturing success!

 

Automated factories: that’s not the IoT’s potential!

It’s easy to see why some people make the assumption that one of the results of the Internet of Things will be fully-automated factories.

After all, if automatic, real-time machine-2-machine data sharing would allow self-starting and self-regulating machinery, wouldn’t that allow us a utopian vision of completely autonomous manufacturing?

Instead, I think Bosch’s Volkmar Denner nailed it with this blog entry. He says that rather than complete automation:

“Instead, it’s about finding ways to increase agility. Putting that into figures, optimizing resource allocation within a more flexible production process can result in a jump in productivity of as much as 30 percent. Our goal is to be able to customize even the smallest unit volumes while retaining optimum productivity, and ultimately leading to achieve optimized multi-variant series production.”

I agree totally that what’s going to happen is an end to centralized management and top-down control of information (see my last post, on “Buckyball Management”!, with decentralized, self-management emerging that could threaten old industry leaders who don’t get it (see my posts about how GE does get it!) :

“… And I’m convinced that this shift will provide opportunities for established companies to offer new business models. But they too need to watch out: the IoTS is shaking up what until now has been very much a closed market, opening it up for entirely new players such as IT companies. Here, the IoTS is not just about connecting objects, machines, and systems. On the contrary, it’s also about how to use the data that this connectivity generates. And instead of using this information only within the plant itself, now everyone along the manufacturing chain can be given access to the data over the internet. Once again, the knowledge gained from these data can be applied to generate new business models.”

Denner says that one of the #IoT services that Bosch — the leading supplier of automotive sensors and one of the leaders in industrial sensors — is developing is predictive maintenance, which innovators such as GE (with its jet turbines) and the railroads (I’ve never traced my ancestry on my father’s side, but I harbor the possibility that I’m descended from the Stephensons, pere et fils, who invented the locomotive, so I have a warm spot in my heart for that industry…) are already doing.  As Denner says, “Having such a solution in place allows organizations to offer their customers new and improved levels of service, including a guarantee of reduced downtimes.”

So don’t count out the human element in manufacturing once the IoT is commonplace: in fact, it will be more important, and more valuable, than ever!

O’Reilly free e-book gives overview of “industrial internet”

Posted on 18th April 2013 in energy, Internet of Things, manufacturing, transportation

O’Reilly has published a free e-book,  “Industrial Internet,” (underwritten by GE, which, not so coincidentally, uses the industrial internet as the advertising slogan for its own involvement in the field…) about the “coming together to software and big machines.” It’s a great introduction to this crucial portion of the Internet of Things.

The message of the book? “With a network connection and an open interface that masks its underlying complexity, a machine becomes a Web service, ready to be coupled to software intelligence that can ingest broad context and optimize entire systems of machines.

“The industrial internet is this union of software and big machines… It promises to bring the key characteristics of the Web — modularity, abstraction, software above the level of a single device — to demanding physical settings, letting innovators break down big problems, solve them in small pieces, and then stitch together their solutions.”

Author Jon Bruner emphasizes that industrial internet devices don’t necessarily have to be connected to the public Internet: “…rather, it refers to machines becoming nodes on pervasive networks that use open protocols.”

Machines are reconceptualized as services, “…accessible to any authorized application that’s on the network. Those applications make it possible to simplify optimization of the physical devices without requiring as much knowledge. Most importantly, “…the industrial internet makes the physical world accessible to anyone who can recast its problems in terms that software can handle: learning, analysis, system-wide optimization. (my emphasis)”

Bruner points out that the bigger the network (think the entire US air traffic control system) the more optimized it can become. As Big Data takes over software intelligence “will become smarter and more granular.”

Hallmarks of the industrial internet will include:

  • fewer, smarter machines
  • less labor required to operate them
  • “Any machine that registers state data can become a valuable sensor when it’s connected to a network.”

One point that really struck me was that physical products will be able to be improved on the fly, rather than just when a new model is introduced — think of what that means, in particular, for cars, which can often last up to 15 years: it will become possible to change engine settings simply by a software upgrade transmitter via a smartphone app!

“A software update might include a better algorithm for setting fuel-air mixtures that would improve fuel economy. Initiatives like OpenXC8, a Ford program that gives Android developers access to drivetrain data, portend the coming of ‘plug and play intelligence,’ in which a driver not only stocks his car with music and maps through his phone, but also provides his own software and computational power for the car’s drivetrain, updated as often as his phone. One driver might run software that adjusts the car’s driving characteristics for better fuel economy, another for sportier performance. That sort of customization might bring about a wide consumer market in machine controls.

“This could lead to the separation of markets in machines and in controls: buy a car from General Motors and buy the intelligent software to optimize it from Google. Manufacturers and software developers will need to think in terms of broad platforms to maximize the value of both their offerings.”

WOW!

The e-book includes a chapter on the crucial issue of security, arguing that, paradoxically, it may be easier to provide security on an Internet-based network — on the premise that the Internet is constantly challenged by hackers and constantly adapts — than on a more limited network. It mentions Shodan (I’ve been seeing a lot about that one recently!) and Basecamp2 as magnets that attract those who might want to hack the Internet of Things.

There’s also a chapter full of helpful case studies from pioneering industrial internet companies in fields including utilities, HVAC/building controls, automotive (I found that one particularly interesting), aviation, railroads (paradoxically, one of our oldest industries is among the most advanced in its use of sensors and other industrial internet technology, as I’ve reported previously), health care, and manufacturing. Any smart manager should get ideas for his or her company by reading them!

“Industrial Internet” is a must read! Download it today.