Leveraging IoT across the manufacturing value chain


Advent of IoT  has led to a scenario that involves the clash of two worlds – A world in which those in the physical asset (machinery) world and those in the virtual (IoT) world need to collaborate to create products that combine physical products with internet based application services.

This implies a major shift for manufacturing services. In this new ecosystem, manufacturing companies will have to build up capabilities in IoT service development and operation ; in other words, the achievement of ‘integrated production for integrated products’. In other words, IoT will lead to an IoT enabled Value chain where every aspect, from design to after sales service will leverage IoT technology.

Exploring an IoT enabled value chain : A Manufacturing context

To understand the impact in detail, we will review a high level overview of manufacturing value chain of tomorrow – one that is enabled and integrated by IoT technology.

Sales and Marketing : Servitization

The concept of servitization essentially means that manufacturers move from a model based on selling asset towards a model in which they offer a service that utilizes those assets. An example of this is Rolls Royce. The company earns approximately 50% of its revenue from services – by leasing jet engines to airlines on a “power by hour” basis.

Sales teams will have to adjust their entire sales strategy. It will require changes in sales incentive models. Models based on upfront revenues will have to be restructured towards models that support recurring revenues, which allow for the stabilization of revenue forecasting.

Marketing teams will need to leverage detailed product usage data to drive marketing campaigns and define precise customer segments. This direct link to the customer via the product can be of huge value for sales and marketing teams, making it easier for them to run targeted cross-selling and up-selling campaigns.

Customized Product offering:  More and more markets are demanding fully customized products, ranging from soda, sneakers to cars built as per customer specifications.

Engineering : End to End Digital Engineering

Digital Engineering is already a reality in most large manufacturing organizations today. Tools like Computer Aided Design (CAD), Computer Aided Production Engineering (CAPE) and Manufacturing Execution Systems (MES) have been around for a while but new advances are also getting incorporated in Manufacturing Design and engineering.

One important and beneficial aspect of IoT is its ability to link the physical and virtual world. Digital Twins are built upon this important aspect. You can think of Digital Twins as 3D Models of physical assets that are built using the physical-virtual link enabled by sensors, lasers and localization technologies.

These 3D models will radically transform product designs, allowing engineers to experiment virtually, leveraging technologies like 3D models and Augmented Reality.


It is no news for anyone that IoT tech will have a profound impact on Manufacturing processes and systems. Here we will touch upon some key ones.

Customization and Flexibility: As the customers become more demanding, manufacturing concepts like ‘batch size one’ and ‘one piece flow’ are coming to the forefront.

A key expectation from Industry 4.0 is that it will enable decoupling of production modules to support more flexible production. The concept of Product memory can be leveraged to attain such flexibility. As per this concept, semi-finished products can be equipped with RFID chip or similar technology that performs a product memory function. This memory can be used to store product configuration data, work instructions and work history. These intelligent semi-finished products communicate with production modules to deliver instructions on what needs to be done.

This flexibility in turn allows the extreme customization mentioned before.

Integration: Industry 4.0 has led to emergence of concepts like Manufacturing Operations Management (MOM) have emerged to help integrate and analyze data from different levels across the organization like machine, production line, plant and enterprise.

Visibility and Efficiency: Sensors, lasers and localization technologies provide the capability to monitor the Manufacturing assets and machines in real time, leveraging the Digital Twin. Monitoring data can be processed through analytical models to gain manufacturing efficiencies not only in terms of process efficiency but also in areas like maintenance etc.

Emergence of Key Technologies: IoT techology and Industry 4.0 have led to emergence of many technologies that will become relevant for the factory of the future:

  • 3D Printing
  • Next-Generation robots
  • Intelligent power tools
  • High precision indoor localization

Aftersales Services

Servitization, as explained above, also means that aftermarket services will become very critical. One of the key aftermarket offering that will leverage IoT will be Remote Conditional Monitoring (RCM).

Remote Conditional Monitoring (RCM): RCM can fundamentally change the customer service and support offering. IoT will enable remote and real time access to data generated by the physical asset.  This ability, as you can imagine, is invaluable for support services as it will allow more efficient root cause analysis and solution development.

Predictive Maintenance:  Manufacturers can offer predictive maintenance as a service, leveraging the real data data generated by assets. For buyers, predictive maintenance has the potential to significantly improve operational equipment efficiency (OEE). For end consumer products, predictive maintenance is a great way of improving customer service.

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