Smart, connected devices have evolved in recent years, transforming our lives, from the way we take a ride to how we turn on lights in our homes.

Although the consumer market is booming with the Internet of Things (IoT), the most lucrative space for the IoT is perhaps in manufacturing. The Internet of Things initiated the latest industrial revolution, commonly referred to as Industry 4.0 — and the emergence of the smart factory.

A smart factory uses the Internet of Things, also referred to as the Industrial Internet of Things (IIoT), to help create an intelligent, decision-making environment of connected devices and things with proactive, autonomous and analytics capabilities.

How manufacturers benefit from the IoT

To some extent, companies have been using the IoT for a while. In addition, expanded capabilities and migration to the cloud and edge computing have escalated the value of the IIoT. And this is arguably just the start of things.

Whether a manufacturer is using the IoT or not, business leaders have common expectations for what that level of connectivity can do for business. 

With approximately 20% believing the IIoT will bear no impact, company change-makers have a whole lot of work to do to educate leaders and show the value of such an investment.

Manufacturers are starting to adopt the IoT to help improve quality control, achieve operational efficiency, transform the customer experience and more. 

But manufacturers already invested in IoT are noticing a return on their investment in the form of improved product quality, greater operational efficiency and safety, better inventory tracking and much more accurate demand forecasting. A few companies are also using technology as a differentiator to enhance customer experience.

What’s more, 61% of manufacturers who have implemented an IoT strategy believe they have barely begun to scratch the surface of what IoT can do for their business. 

Digital innovation is bringing tremendous disruption to traditional businesses. And it’s an organization’s ability to evolve that will ultimately determine the fate of the company.

Barriers to the IoT

Although the value of digital innovation is apparent, widespread adoption has been slow. A 2017 McKinsey Global Institute report revealed roughly half of manufacturers don’t have a digital roadmap. Let us explore a few reasons for this.

For a handful of organizations, the largest challenge is available talent — they simply don’t have the internal expertise to plan and implement digital innovation initiatives. With continued strain on IT budgets, organizations struggle to both manage the priorities of today and invest in the talent required to help them transform their business.

Driven by instant goals of lowering costs and returns, some manufacturing companies have deferred tech investment. The average factory today is 25 years old, according to the McKinsey report, with machinery that’s going on nine years old. Prior to any plans of integrating the IoT can start at these plants, they must first upgrade equipment to enable digital readiness.

But, lack of IoT integration isn’t necessarily because of an unwillingness to invest. Many organizations pursue digital innovation, but a large number of these projects are doomed to terminate. In fact, 74 percent of companies that begin an IoT initiative fail. 

This can happen when projects go over budget, deployment times operate long, interoperability issues occur across legacy platforms or planning and resources aren’t allocated appropriately.

Another reason organizations hesitate to invest in the IIoT is the speed of technology development. 

According to the McKinsey report, The U.S. manufacturing industry’s relatively slow pace of digital adoption has been a drag on its productivity performance. Industry 4.0 can help companies up their game, and the stakes are higher than ever as the global marketplace grows more fragmented and fast-paced.”

The Way to overcome IoT barriers

Knowing where to start and what to solve is the first step of a successful IoT journey. What are your short- and long-term goals? The numbers don’t lie. The numbers don’t tell you the answer, but the numbers tell you where to start looking. 

You have to take a data-driven view to come up with a hypothesis of what you’re trying to solve. Innovative teams can work fast to check and learn.

Don’t feel held back by a budget. Although the rapid development of technology may be daunting to some, the quick churn of technology advancements also lowers costs as cutting-edge technology becomes more commonplace. This is true for some robotics and other analytics software — making the initial capital investments more palatable.

Businesses should be establishing unique teams whose sole purpose is to innovate inside a traditional world. Because if they’re not testing and learning, if they’re not practicing that, if they’re not starting to build that DNA, it’ll be very hard to move quickly enough if they ever do get threatened.

You need to also understand when you need outside help. Work with a trusted partner that specializes in IoT solutions and can help you plan, deploy and maintain with minimal disruption to your daily operations. 

And, as with any large initiative, appropriate planning is key. You want to take the time to communicate with all facets of the business.

The move to a smart factory isn’t an instant fix — and that’s really the point, implementing a strong IoT strategy is an investment of time and resources. But when it’s done correctly, you’re already ahead of the changing marketplace — and your competitors.

Why the time for a smart factory is currently

Digital transformation is no longer a wish list item — it is a business imperative. Manufacturers have to be ready to answer accelerated product cycles, master agility for changing market demands and navigate fragmented markets.

If you’re not actively using digital innovation to produce a better product, lower operational expenses or create better customer experiences with your brand, you can bet your competitors are. 

Integrating the IoT can help your manufacturing enterprise realize new revenue streams, monetize existing offerings and create differentiated end-user experiences. In other words, digital innovation can allow you to maximize technology potential so you can manage business today and transform for the future.