The Internet of Things is enabling us to do things we have never been able to do before, and at a faster pace than ever before. But it is not obvious to all companies where they can derive business value from IoT. In order to identify how IoT can bring value to your organization, one must first understand what the advantages are of this technology.
Access to Real-Time Data
One of the biggest value propositions of IoT is access to real-time data. We have had access to real-time data for years, but now we have the ability to gain access to data in ways that were never available to us. Thanks to the billions of smart phones, sensors and internet-enabled devices that are carried by people, installed in factories, and embedded in just about everything we make, we can now tap into data streams that were never before available to us in real time.
Why is real-time so important? With real-time data, we can discover insights faster and respond to them instantly. Being able to respond to new information in real time gives us the opportunity to communicate to shoppers when they are near your store or product, perform preventative maintenance on machines, engines and vehicles before they malfunction and more accurately forecast manufacturing and energy production capabilities.
Shipping and logistics companies are able to provide higher levels of service by tracking packages that are being shipped from the warehouse to the customer. Tracking the location of products is nothing new, but the amount of information we can track today is cutting-edge.
Sensors are also being used to track the condition of products. For items that need refrigeration or heating, sensors can detect when the temperature of the products are suboptimal and alert systems or people to take the appropriate action to prevent spoilage. Logistics companies can track weather and traffic conditions to optimize the route in an effort to deliver the products to the customer faster.
Companies are also using sensors on the seals of products to detect if products are authentic or have been tampered with prior to delivery and consumption by consumers. The way in which real-time data is being used on products and transportation devices (rail, air, truck, etc.) is endless.
Cities and governments are using real time data to provide citizens with a variety of services, including emergency response, crime prevention, weather services and improved efficiencies in waste collection, noise and traffic reduction and much more. All of these services are made possible by ingesting large quantities of real-time data from sensors placed throughout the physical environment, and applying analytics and machine learning techniques to automatically react to situations.
All of these new ways of tracking and harvesting data can lead to better services for customers. Companies can know more about the condition and location of their products and provide faster and higher quality delivery services. At the same time, they can provide more information to their customers throughout the supply chain.
New Business Models
The most exciting area of focus for IoT is in new business model development. Having the ability to access real-time data and make real-time decisions has opened the door to new revenue streams. Here are three examples.
Train engine manufacturers are looking for new ways to monetize their products. How can they derive a business model that generates recurring revenue on a multi-million dollar train engine? The current problem they face is that there is a limit to how many engines they can sell. Customers make a huge investment when they purchase an engine and then have to withstand a long technology refresh.
Manufacturers of large, expensive train engines are looking at becoming service providers. By collecting sensor data from the locomotive, they are able to sell information and services back to the customer for a recurring, monthly subscription fee. This real-time data can be used in the following ways:
- Preventive maintenance – protect the customer’s large investment to extend the life of the engine.
- Logistics services – collect weather, rail condition data, engine diagnostics, etc. to optimize delivery, improve safety and provide customers with better service levels and data.
- Industry leadership – combine sensor data and crowdsourced information from consumers, workers and consumers of the supply chain, to provide premium data services to the industry.
Consumer Packaged Good (CPG) Providers
Consumer packaged goods are products such as food, beverages, footwear or other products that need to be frequently replaced. CPG companies are looking at IoT to drive revenue through new sales. Brick and mortar stores are struggling to compete against eCommerce sites like Amazon.com and Walmart. com, but CPGs have a unique opportunity to leverage IoT and sell directly to consumers. By integrating with smart home and mobile services, CPGs can gain more knowledge of their consumers’ spending habits, location and current inventory, thus influence the frequency and recency of product purchasing. In addition, CPGs are leveraging voice and mobile capabilities to make purchasing simpler, thus increasing sales and brand loyalty.
Manufacturing and Preventive Maintenance
The manufacturing industry was an early adopter of the Internet of Things because of the opportunity IoT allowed for real-time monitoring of the entire manufacturing process. This gives manufacturers the ability to react to potential issues in the value stream before they create large amounts of waste. Here are a few areas where preventive maintenance can help:
- Early detection of wear and tear on machinery
- Early detection of defects of products
- Inventory and material tracking
Real-time access to the above information can detect problems earlier in the production phase and apply corrective actions with little to no impact on the overall manufacturing process. This can result in net savings of millions of dollars, while driving up product quality and driving down product costs.
IoT’s real value lies in its ability to enable real-time data capture and just-in-time decision making. Companies leveraging IoT successfully are creating competitive advantages in areas like improved customer service, increased quality, enhanced operating performance, and are also exploring the opportunities for new business models. If your company is not actively engaged in learning about the Internet of Things, we highly recommend you start. Don’t get left behind on the IoT train.