In recent times, there has been increasing chatter and numerous discussions about the Internet of Things (IoT), Industrial Internet of Things (IIoT), Internet of Everything (IoE), Industry 4.0, Cyber-physical Systems etc.  The extrapolation and trend analysis experts are predicting that the estimated 4.9 billion “things” currently connected in 2015 will rise to 25 billion by 2020 (Gartner).  Digital Strategy Consulting reports 40 to 80 billion connected devices.  25 billion, 80 billion or somewhere in between – the precise number is unimportant.  What is significant is the exponential growth rate being predicted.

This article is intended as an overview of IIoT and the implications for Small and Medium-sized Manufacturers (SMM’s).  It also discusses the issues of productivity, profitability and the daily challenges that are inherent to SMM’s.  Hyperlinks to aid in further investigation and knowledge acquisition have been used liberally throughout the text.


In our everyday lives such as in our cars, stores, smart phones, home security systems, wearables etc., we see examples of the marvels of digital devices and apps making our lives easier.  We use digital data in ways we could not have comprehended even 10 years ago.  We see how the Human Machine Interface (HMI) has evolved from blinking orange or green cursors on bulky CRT computer terminals to sleek LCD monitors on computers and touch screens on smart phones and tablets. Our interactions with devices have become so much easier and more fluid. (Remember the seemingly insurmountable task of fixing the flashing “12:00” on VCR’s of the past?)   We seem to be doing quite well adapting and exploiting hi-tech when it comes to our personal tech or office tech.

However, when it comes to manufacturing industries, matters are quite different, especially for most SMM business owners.  Topics and articles covering these revolutionary trends seem too esoteric, too high tech and too far removed from their daily challenges.  Dr. Thomas Kurfess , in a webinar on Advanced Manufacturing, organized by SME, put it quite succinctly by saying that “the big guys get it and they are moving forward on it but we have got to get this down to the smaller guys.”  90% of manufacturing establishments in the US are SMM’s and employ 45.5% of the manufacturing workforce (2012 US Census Bureau Report).  If SMM’s could harness the benefits of IIoT and become more effective and profitable, then this would have a sizeable impact on the US economy.

IoT, IIoT, Industry 4.0, etc., are all manifestations of what many are terming the third industrial revolution (or for some schools of thought, the fourth industrial revolution).

The first industrial revolution (1760 – 1840) started with the discovery of the power of steam and its use in driving machines for production of goods and transportation.  The second industrial revolution (1870 to 1914) saw the implementation of mass manufacturing and increased economies of scale and production throughput as in Henry Ford’s assembly line that started up in 1913.   Digital manufacturing combined with renewable energy sources initiated the third industrial revolution.  This period began with the advent of the programmable logic controller (PLC), in the late 1960’s and the digital information age and the world wide web (the internet) in the 1970’s. IoT, IIoT, additive manufacturing (3D printing) etc. are considered by some, (The Economist, Jeremy Rifkin), to be an ongoing manifestation of the third industrial revolution.

Industry 4.0 (term originating in Germany) proponents believe that the technologies of Cyber-Physical Systems or “smart” systems, IoT, Smart Factories, Machine-to-Machine (M2M) communications are far more advanced and quite distinct from the early digital systems.   They believe that the fourth industrial revolution is now underway with the wider adoption of these technologies and decided to term this revolution as Industry 4.0.

Whether it is the third or fourth industrial revolution, is irrelevant and merely a matter of semantics and of significance to historians.  What is more important is to recognize that a revolution is underway and, like all revolutions, will bring with it dramatic change, break-through progress, as well as annihilation, assimilation and birth of new companies.  Standing stagnant is not an option in any revolution.  What can SMM’s do in order to keep moving and stay relevant and, above all, benefit from this sea change in technology taking place in their domain?  Let us examine the issues involved.

IIoT system elements:

IIOT Platform

Figure 1

Figure 1 is a schematic representation of the typical structure and components of an IIoT implementation at a manufacturing company.

The Data Layer is the level of collection, where sensors, Radio-Frequency Identification (RFID) tags, actuators, and other devices collect the raw data from shop floor and remote operations.  The digital bits of data collected at this level are sent to a data integration (sometimes loosely called “data mashup”) platform that converts this data into human readable and meaningful format.  This is the Information Layer.  This information is then fed back to the shop floor or other remote operational units through dashboards on computer screens or smart devices providing a visual representation of the raw data.  This visualization, replete with alarms, set point limit indicators etc. drives appropriate monitoring and controlling actions.

The Knowledge Layer is where the information from the IIoT platform is fed into the enterprise business software such as the ERP, CRM, HRM packages for further analysis and long term storage/retrieval purposes in the cloud.

Challenges of implementing IIoT for SMM’s: dispelling the apprehensions

The big, hairy, scary challenges of capital cost constraints, lack of resources (mainly time) and skills gap, have always existed for SMM’s.  Needless to say these challenges, perceived or real, also exist with respect to implementing IIoT.  However, with IIoT, these challenges prove to be less formidable and much easier to overcome with deeper knowledge and understanding.   The remainder of this article is intended to assist SMM’s in that understanding and specifically examines these chronic challenges.

Capital Cost Constraints:  The issue of capital costs associated with implementing any new technology and the resultant cost of obsolescence of their existing equipment and machinery weigh heavily on SMM management.  In fact, most SMM’s, by default, tend to adopt a wait-and-see approach to any new technology until they have convinced themselves or are compelled by customers or competitive pressures, to make the necessary changes, or risk oblivion.  In the case of IIoT however, there is good news with respect to costs:

a)     IIoT implementation can be started selectively and incrementally, using, what has now become inexpensive, additions or upgrades to existing equipment and infrastructure.

For example, the Arduino, which is a micro-controller board, allows you to make a computer for less than $100 and can be driven by software designed in an open sourced development environment.  A great learning resource for IoT implementers is the Raspberry Pi, a credit-card sized computer that can be used for a variety of applications.  The cost?  About $40!

The report by the Manufacturing Institute on IoT implications for manufacturing, says that “data first needs to be gathered”.   Without sensors, there can be no data leave alone “big data”.  Without data there can be no feedback loops for systems regardless of how well-connected to the Internet these devices are.  Sensors (thermal, vibration, pressure, position, optical, etc.) are probably the most fundamental building blocks of IIoT.

Therefore, the first step on the road to IIoT is installing sensors.  The Manufacturing Institute report goes on to say, “manufacturers are deploying instruments such as sensors and controllers or even smart, networked cameras or RFID readers to measure a wide range of operational processes.”  If you do a quick search on Google shopping for “sensors” or some sensor supplier sites, like Balluff, Texas Instruments, etc. you will see how inexpensive sensors are at present.

Of course indiscriminately slapping on sensors to every machine, device or person possible is not being suggested.  A typical SMM is painfully aware of their biggest problem areas, whether it be in manufacturing, logistics, supply chain, production control, inventory control or overhead costs.  A quick Pareto analysis should identify the top candidates for study and analysis.  Applying sensors or other smart data collectors to these critical problem areas will yield the biggest impact and provide the most significant return on investment.

The second step towards IIoT implementation is selecting the software platform for the data integration, interpretation and control.  Here too, the costs can be quite reasonable.  For example, platform charges 1 per thing per year.  While this platform may not be as robust as some of the others mentioned in Fig.1, it can allow for a small manufacturer to start gaining the financial benefits of the IIoT without breaking the budget.  The key to keeping the costs of the platform software within reasonable limits is to opt for open-source, open-architecture based platforms.  There are many solid platforms out there that are being developed in the open source domain.  The Industrial Internet Consortium, the Open Interconnect Consortium and other similar bodies have been formed, under the leadership of industry giants such as AT&T, Cisco, GE, Intel, Samsung, etc., to further the technology and develop the standards for connected devices and machines.  The fact that these industry giants are involved in non-proprietary software development is  a clear indication that open source solutions are going to be the norm rather than the exception in the field of IIoT.

b)    Furthermore, it is more than likely that the machinery and equipment on the shop floor already has the ability to be interconnected into the IIoT.  Machine manufacturers are making their machines compatible with a host of platforms.  One such platform, MTConnect, is specifically designed for manufacturing industries and is cost effective because of its open source model.   The MTConnect site lists manufacturers that are using this platform.   Therefore, getting started with IIoT implementation may be as simple as connecting existing machines to an intranet and tying them into a software platform for data analysis to drive action.

If an older machine is not able to directly transmit data recognized by the software platform, then adapters can be used.  Adapters are essentially hardware or software devices that convert the machine data to a format that is understood by the software driving the platform.  If an adapter is not readily available, then one can be created without too much of trouble or expense.

A review of a list of IoT platforms, (including the list shown in Fig. 1) shows us that there are many solutions out there.  Some are more expensive than others.  Some are more relevant to one industry, e.g. agriculture, than another.  A careful review and prudent choice of platform will go a long way in being able to effectively analyze and utilize the information collected from the shop floor.

c)     There is an increasing body of evidence documenting the financial rewards of connecting to the IIoT.  For example, GE reports IIoT systems as delivering 15% reduction of inventory with predictive maintenance, 30% improvement in overall equipment effectiveness (OEE), and 25% increased capacity of existing equipment.  Cisco predicts that IIoT “could increase global private-sector profits by 21% in aggregate between 2013 and 2022”.

Implementing IIoT will yield financial benefits with an attractive ROI.  Therefore, invested capital is quickly recovered, yielding an attractive ROI.

Lack of resources (mainly time) and skills gap:  In many ways this challenge is typically more debilitating than the financial constraints.  Implementing any new initiative involves freeing up people and pulling them away from their already overloaded schedules, so that they can work on the implementation.  On top of that, any implementation will most likely necessitate disruptions in production schedules, as machines and equipment will require to be worked on to connect then to an intranet or have new hardware installed.  For shops that are struggling to adhere to delivery schedules, such disruptions quickly become contentious and the changes get pushed off and delayed.

Again, for IIoT implementation, this obstacle too could possibly be easily overcome, for the reasons discussed below.

a)     IIoT implementations will save time and reduce costs!  Any setbacks from upfront utilization of existing human resources can be quickly recovered.  SMM’s may be skeptical of the claims of the savings achieved from IIoT and that is understandable.  They have heard this claim many times for the “latest and greatest innovations”.  With IIoT, prudently implemented, the stated benefits are achieved quite quickly and should be able to sway even the most battle-hardened skeptic in SMM organizations.

Prudent implementation involves a clear game plan.  Since making existing machines and legacy systems IIoT ready prove to be the most disruptive, the plan should clearly spell out the expected, quantifiable estimates of time and cost savings that would be achieved through IIoT implementation.  Company management should assimilate and then disseminate this information throughout the organization for total organization buy-in and preparedness.  They shall have to demonstrate unwavering commitment and provide the guidance and leadership, without which such initiatives fail.  Accountability for a successful implementation should be enforced without bias or wavering so as to cause minimal chaos, conflicts and disruption.  Take for example, when maintenance department personnel comprehend how their jobs (“What’s in it for me?”) become easier through time saved from timely and actionable IIoT data and information, they are bound to become avid proponents and champions of the implementation.

b)    A more direct approach of overcoming the lack of resources would be to hire additional people rather than draw from existing pool of human resources.  In so doing, any current skills gap with respect to the knowledge of the technology behind IIoT implementation can be reduced or eliminated.  However, SMM’s are always hesitant about additional hiring, especially for high-skilled jobs, where the salaries are expected to be higher.

Here again, we see that IIoT implementation comes with a refreshing difference.  The knowledge and skills needed in IIoT implementation are more current technology-based and not so much experience-based.  An enthusiastic high school student (as interns) who thrive in dabbling with tech gadgets and coding, could prove to be a valuable, yet low cost asset to a SMM.  Likewise, fresh out college graduates or diploma holders in the field of Mechatronics, Advanced Automation and Robotics, Advanced Manufacturing Processes and Systems, could quite easily take on the implementation of IIoT projects in SMM’s.  The salary burden for fresh graduates would be significantly less than hiring an experienced individual (which in the case of IIoT is practically non-existent given the state of infancy of the technology).

Then there is always the option to bring in technology companies and systems integrators who could manage the implementation on a turnkey basis.  If finances are not a major concern, this will be a quicker option.   MTConnect has a list of integrators available on their site.

c)     There are numerous equipment companies, consortiums, university research bodies, etc. who are eager to assist SMM’s in their IIoT implementation for free.  The reason behind this is the fact that this allows them to test out their own technology and platforms and get valuable data to further improve their machines or the technology being developed.


Should SMM’s wait it out for a while? No! Waiting it out, as they are often inclined to, with new technology, is simply not an option.

IIoT implementation can be incremental and starts yielding benefits immediately.  The up-front costs are relatively low and the payback significant.  The traditional roadblocks, typically faced by SMM’s in adopting any new technology, are much easier to circumvent in the case of IIoT implementation.

SMM’s simply cannot afford to be fence-sitters in implementing this game changing technology.


Published on LinkedIn