The world of manufacturing is rapidly changing. Some of the major trends permanently transforming this industry and unlock new Business Models with loT are:
- Robots replacing people, drastically reducing the time and cost to produce a product.
- Just-in-time delivery and increasing business agility means goods are produced closer to end consumers.
- Value chains—the series of steps performed in order to create and deliver a product or service—are becoming increasingly regional. Most of the value is concentrated in product design, development, marketing and sales rather than in the production itself.
- Competition is growing while profit margins are narrowing.
These changes do, however, create a unique opportunity for manufacturers to grow locally and internationally. New revenue streams can easily be found by first expanding into new business models and second, by increasing the stickiness with the existing customers by replacing on- and off-again transactional relationships with more enduring ones.
The key to unlocking new growth opportunities and expanding existing business lies in the successful adoption of a technology called The Internet of Things (IoT). This guide is designed to help you, as manufacturing business leaders capitalize on the opportunities presented by IoT and deliver a remarkable value to your customers.
Opportunities for Manufacturers in IoT-enabled business
The Internet of Things— a machine-to-machine network that needs little or no input from humans— is now fully transactional. Refrigerators can order their own replacement parts. Smart tractors can place their own service calls. Manufacturing plants can order their own supplies and even use artificial intelligence to fine-tune their orders based on market conditions, weather reports, and any number of other factors. The Internet of Things is taking the “sell and forget” model, where businesses don’t hear from a customer again after a single transaction, and replacing it with an ongoing ‘as-a-service’ model.
Perhaps counterintuitively, this requires more marketing and post-sales support from human employees yet, perhaps obviously, it also requires a commerce platform that supports a vast array of touchpoints that goes well beyond the now-standard website, mobile app, and social media channels.
According to the World Economic Forum, the number of connected devices is expected to triple by the end of 2025 to more than 20 billion devices, making the IoT a true game changer.
Alongside that, the IDC predicts that revenues from the Internet of Things are expected to surpass $1 trillion by 2022. Two thirds of all connections will be industrial rather than personal or residential—smart buildings, smart utilities, smart cities, smart manufacturing, smart retail, and smart health. This creates an opportunity for Manufacturers to drive revenue growth through the introduction of new IoT-enabled business models.
With the proliferation of IoT-enabled business models, enterprises will transition to a smart, data-driven, automated manufacturing system. This kind of system relies on information to analyze demand, product performance, and historical patterns to order products and services through marketplaces governed by smart contracts and blockchain technology. Products are monitored during shipment via location sensors, and their movement through the manufacturing process is tracked with RFID chips.
IoT-enabled business models vary greatly depending on a manufacturer and their digital maturity. Here we share select B2B use-cases and case studies of companies leveraging IoT.
IoT Use Case 1: Automated Inventory Replenishment
A manufacturing warehouse is equipped with smart shelves that automatically track inventory levels. When an item’s availability drops below a predefined threshold, an order is automatically sent to the manufacturer. Payment can be collected at the time of the transaction or later.
- Reduction of operational expenses by keeping inventories at a healthy minimum with just-in-time delivery.
- Refocusing sales staff from fulfilling recurring orders to building customer relationships.
- Greater customer stickiness thanks to an ongoing business relationship.