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The Industrial Revolution:

As the evolution of industry continues, a vision for what comes next must surely include, “The Internet of Things.” This concept is also known as Industry 4.0 and it follows the historical progression started by the industrial revolution (Industry 1.0) in 1784. At this time, mechanical machines were invented and fueled by water and steam power. This period was followed by Industry 2.0 (1870) which featured mass production powered by electricity. Industry 3.0 (1969) raised the bar with the use of programmable systems, the rise of information technology and electronics to further drive automated processes. The information used in this article was gleaned from a variety of industry, trade and technology journals.

What is the Internet of Things?(IoT):

The advent of Industry 4.0, initially started by the German government and revived in 2012, promotes computerization of manufacturing into what has now become “Smart Factories.”

The concept of Industry 4.0 advocates for the follow four design principles:

Interoperability: The ability of machines, devices, sensors and people to connect and communicate via the Internet of Things (IoT)

Information transparency: The creation of a virtual copy of the physical world utilizing enriched plant models with sensor data.

Technical assistance: The data supports human intervention by solving urgent problems

Decentralized decisions: Physical cyber systems make decisions automatically based upon formulas and logarithms determined by an analysis of collected data.

Focused initially in the manufacturing segment, the goal is to make sure companies are competitive in a highly dynamic global market by accelerating the adoption of Internet-connected technologies across industries. To support this next evolution in industry, the Internet of Things is a network of intelligent computers, devices, and objects that collect and share huge amounts of data. The collected data is sent to a central Cloud-based service where it is aggregated with other data and then shared with end users in a helpful way. The IoT will increase automation in homes, schools, stores, and in many industries. The application of the IoT to the manufacturing industry is called the IIoT (or Industrial Internet or Industry 4.0). The IIoT will revolutionize manufacturing by enabling the acquisition and accessibility of far greater amounts of data, at far greater speeds, and far more efficiently than before. A number of innovative companies have started to implement the IIoT by leveraging intelligent, connected devices in their factories.

A Financial Perspective:

A recent market research report forecasts growth of $151. billion in the U.S. by 2020. The Internet of Things is still in its infancy and has decelerated by the challenge of collecting, analyzing, and hoarding vast quantities of data for historical, predictive, and prescriptive information.Industry leaders are now asking, “Why would connecting my M2M (Machine-To-Machine) architecture to the Internet provide me with greater value?” A fair question with a simple answer. Operational cost and in-efficiency savings in most industries only requires Industrial Internet savings of 1% to make significant gains.A 1% savings in the aerospace industry equates to over $30 billion, Power gas stations, $66 billion.

The critical assumption driving the Internet of Things is the complexity of industrial systems has outpaced the human operator’s ability to recognize and address the efficiencies, thus making it harder to achieve improvements through traditional means. This can result in machines operating well below their capabilities and these factors alone are creating the operational incentives to apply new solutions.

How Does the IoT Concept Apply? Think in terms of an economy based on outcomes:

In an outcome economy, manufacturers will observe existing problems from a different perspective.For example, what if instead of selling light bulbs, you sold light?Perhaps a more practical example is truck tires. A logistics company doesn’t want to buy tires for every truck in its fleet up front, not knowing how long they might last, so they are always looking for discounts and rebates. However, in the IoT outcome economy, the logistic company only pays for the mileage and wear it uses on the tires, each month in arrears.

Another example of the outcome economy is Rolls Royce jet engines. In this example, a major airline does not buy jet engines; instead, it buys reliability from Rolls Royce’s Total Care. The airline pays fees to ensure reliable jet engines with no service or breakdowns. In return, Rolls Royce supplies the engines and accepts all the maintenance and support responsibilities.

It may be awhile before Industry 4.0 becomes universal but that does not mean you have to be the last to adopt it. To learn more about how the Internet of Things can revolutionize your company, please call us at 585-389-1294.