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Leverage the Internet

of Things to Set Up a
Smart Factory
Table of contents

Executive Summary 3

Industry 4.0 3

The Internet of Things 3

Data 3

Automation 3

Precision 3

Industrial Automation 3

The Value Proposition 4

Increased Product Revenue 4

Saving on Labor Costs 4

Business Benefits 4

Essential Components for IoT in Manufacturing 6

Sensors 6

Network Connectivity 6

IoT Platform 7

Data Analytics and Visualization 8

Business Case of IoT in Manufacturing 8

Types of Sensors 8

Choosing the right IoT platform 8

Web and Mobile Application 8

The IoT-Enabled Smart Factory 9

Helping You Create Your Smart Factory 9

Conclusion 9

Leverage the Internet of Things to Set Up a Smart Factory 2


EXECUTIVE SUMMARY INDUSTRIAL AUTOMATION
Manufacturers today are under tremendous pressure from IoT is ideal for increasing the level of automation in today's
management and customers to deliver high quality products factories. For manufacturing companies that have already
and services at low costs in a minimum amount of time. Today's installed sensors, actuators and other low-level devices in their
market leaders rightly believe that return on their investment existing industrial automation systems, upgrading and retrofitting
(ROI) is multidimensional, determined by not just costs, but also IoT-enabled devices is an easy step.
measures of customer satisfaction and more. Companies are
These companies can take advantage of the increase in network
turning to the Internet of Things (IoT) to collect accurate data
speeds and memory size delivered by today's commercial off-
and convert it into actionable information to help add this extra
the-shelf sensors and other hardware along with well-established
dimensionality to ROI calculations.
cloud platforms. The technology today is robust enough to not
IoT is creating new opportunities for companies to enhance their hamper the design of the systems as was the case in the past.
services, gain business insights from accurate and timely data, This will give plant managers new levels of control and insights
improve business processes and differentiate their offerings. This regarding the production floor.
white paper describes the value of IoT for manufacturing and
defines an ROI model for building a business case and tracking
results related to IoT initiatives.
The key to the success of industrial
INDUSTRY 4.0 automation is making use of the data
IoT has the potential to change the face of the manufacturing that is gathered.
sector, so much so that it has been called the fourth industrial
revolution. If the pace of advancement in technology is anything
to go by, intelligent factories will soon become the norm, rather
than the exception. It’s not enough to just collect data. The key to the success of
industrial automation is making use of the data that is gathered.
The four main factors of a smart factory are IoT, data, The IoT-enabled industrial automation networks collect data and
automation and precision: then transfer it to the cloud or to an internal datacenter. There,
Hadoop and other technologies are implemented to apply data
THE INTERNET OF THINGS science techniques and predictive models to analyze the data
into useful information.
IoT is the torchbearer of the smart factory. More than just
sensors and other “things,” it is the connection of the things to Another reason for manufacturers to adopt IoT in their factories
each other in order to facilitate the collection and transfer of is to delay or prevent obsolescence. Many industrial automation
data. Multiple types of sensors with the ability to connect to the systems in factories today will outlive vendor support. By
cloud are installed in the factory to gather data which helps to upgrading to IoT systems, plant operators can extend both the
optimize the factory. functionality and the lifespan of these systems. And as the cost
of internet bandwidth and storage has been steadily decreasing,
DATA companies can now store terabytes of data very inexpensively
compared to even a few years ago.
Data plays an important role in a smart factory, making it possible
for managers to gain insights for streamlining manufacturing IoT takes industrial automation even further by interfacing
processes, increasing ROI, and more. IoT can also contribute to with robust machine-to-machine (M2M) systems. This covers a
an enterprise’s big data initiatives, with the ability to collect and broad range of technologies used to enable networked devices
transfer massive amounts of structured and unstructured data to to exchange data with each other and perform actions without
save in a centralized location for real-time or future analysis. human assistance. M2M technology has applications in almost
every area of manufacturing including ensuring plant and
AUTOMATION personnel safety.

The IoT system in a factory setting can work autonomously to For example, the company's safety engineers can establish safety
drive and monitor production with minimal human intervention. limits for each piece of equipment. If IoT sensors detect a rise
And equipment longevity is improved by IoT-enabled predictive in equipment temperature that brings it to that safety limit,
maintenance, where IoT sensors can detect faults on the basis the system will record this fact and it will trigger an immediate
of the data collected and independently make decisions to stop shutdown of the affected equipment. Or if the company does
faulty equipment before it fails. not want to implement an automated shutdown system, it can
set up the sensors to transmit data to key personnel with remote
monitoring ability on their desktops, tablets or other devices.
PRECISION These employees can then send instructions to the machine to
IoT sensors and other equipment are designed to sense and shut down, reduce its production rate or carry out any other
measure to an incredible level of precision, making them function in order to take care of the safety issue.
appropriate for almost any factory application, no matter the size
and no matter how exacting.

Leverage the Internet of Things to Set Up a Smart Factory 3


THE IOT VALUE PROPOSITION Step 2: Man hours saved. Looking at work logs, determine
what inspection, diagnosis, and other work per visit could
IoT also delivers value in areas other than on the factory floor, be performed remotely using IoT. For example, if IoT remote
including remote monitoring, remote service, usage analysis, diagnosis could save 30 percent of the time spent on a visit:
ERP/CRM integration and much more. 10 calls x (30% x 4) hours = 12 man-hours saved per week
per technician.
Step 3: Weekly labor cost savings. Multiply the number of hours
Smart, connected products enable remote saved per work week times the rate paid for a field service
technician (assumed here to be $100/hour) to determine labor
monitoring and servicing that drive both cost savings: 12 hours per week x $100 per hour = $1,200 in
a reduction in the costs of service and savings per workweek per technician.
an improvement in the level of service. Step 4: Determine the total savings. Determine the savings
across the entire field service organization by multiplying the
Analysis of connected product data can savings week times the number of workweeks times the number
improve business decisions, product of technicians to determine the total potential savings per year:
design and manufacturing processes. 50 technicians x 50 workweeks at $1,200 saved per workweek =
$3,000,000 annual savings.

BUSINESS BENEFITS
Core business processes like billing, field service, product
registration, compliance, consumable management, recalls and Product Tracking
warranty management can all be improved with connected IoT-connected sensors can help manufacturers easily track
product data. On the other side of the IoT market, the selling products such as raw materials, finished goods, parts and more.
and marketing of connected products can deliver a competitive Real-time updates provided by the system can allow companies
advantage and drive revenue growth. to optimize logistics to streamline and accelerate their processes
Following are examples of demonstrating the value that can be and cut unwanted costs. Tracking products in real time allows
derived from enabling IoT in your company. companies to ensure the quality of their finished goods, maintain
inventory levels and even prevent theft.
INCREASED PRODUCT REVENUE For example, a manufacturing company required an advanced
system for tracking their raw materials while they were being
IoT enablement can add value by creating additional revenue transported. Using RFID tags, the company was able to track the
streams. For example, based on the value-added services exact location of the materials, allowing them to prepare for
made possible by IoT, suppose that a company estimates that a production while they were enroute and be ready for production
connected product line could generate an additional revenue immediately after they arrived. Real-time product tracking not
stream. Assuming customers will subscribe to these services only helps the company improve its efficiency, but also helps
within the first year of product ownership, here is a sample them save on time and costs.
calculation of increased revenue:
Step 1: Determine the value. To determine the value of a Predictive Maintenance
connected-product service contract for each product unit, IoT can help you accurately predict the maintenance cycle of
assuming the average selling price is $50 per year per user, and your devices, machines and their components by analyzing
the average number of users per connected product is 20, this historical data. Analysis of connected product data can also
comes to $1,000 per product ($50 x 20 users). uncover patterns that are early indicators of failures, allowing
Step 2: Estimate the total product revenue increase. Assuming you to initialize service. Rather than performing preventive
a 25% attach rate on a total product unit volume of 100,000, the maintenance on a calendar basis when it may not be needed,
increase in product revenue for the new connected application companies can instead track exactly how much a device has been
would be $25,000,000 (100,000 units x 25% x $1,000). used to determine whether it's time for service. This eliminates
unnecessary preventive maintenance calls and premature repairs
SAVING ON LABOR COSTS or component replacement. Service reps can also perform
preventive maintenance during scheduled calls, reducing
IoT can reduce labor costs by streamlining services and replacing unplanned and planned downtime and customer interruption.
some or all field service with remote work. For example, suppose This predictive maintenance knowledge can then feed increased
that each of a company’s field service technicians deployed in revenues by providing increased uptime with premium SLA pricing.
the field has a capacity of ten on-site customer visits per week,
each totaling about 4 hours per visit. For example, IoT-connected vibration and noise sensors on
machines and other high-end assets collect data regarding
Step 1: Visits per week. Determine the number of visits per the working of the machines and their components. The
week, assuming that an average field service visit at a customer collected data is analyzed in real-time to determine when
location is four hours long. Example: 40 hours per week/4 hours machine failure is likely to happen or predict the breakdown of a
per visit = 10 calls on average per field service technician per week. machine component or part. This helps the factory to carry out
maintenance in advance to avoid expensive downtime.

Leverage the Internet of Things to Set Up a Smart Factory 4


Improved Product Design Keeping Energy Consumption in Check
The understanding gained from real end-user behavior and Energy consumption can be a major expense in a factory, so
usage patterns can be combined with IoT-collected data to yield monitoring is important to help minimize waste and thus reduce
information valuable for product designers. The company can costs. IoT-connected components monitor fuel levels and more
combine this data with real-world customer feedback to define to find out how much power or fuel is being used by certain
next-generation products that with new features that will expand equipment, and the collected data can be analyzed to check if it
market share. is more than the required amount.
For example, a manufacturer of smart watches installed sensors For example, a company decided to use a smart power-
to collect information about consumer usage. They discovered monitoring system to detect how much power is used by every
that many users were rough on the watches, resulting in damage. machine in the factory. When more power than necessary is
This insight prompted the company to change the material detected going to a piece of equipment, the system alerts
used to design their watches to make them capable of enduring technicians, who can ensure the machine is operating to
rougher usage. specifications or that the wiring is correct.

Identification of Quality Issues Warranty Management


By looking at trends across multiple systems, you can reduce An IoT-connected system in the factory can help manufacturers
costs by identifying quality issues. Whether from design flaws in manage warranty costs efficiently by identifying, if machines fail,
parts supplied by third parties or within your own manufacturing whether the failure is a manufacturing fault or something to do
processes, looking at the trends helps you to understand what is with the way the product was used. This has a huge potential for
causing downtime for your customers. Ultimately this can allow manufacturers supplying equipment to factories and can help
you to prevent downtime, reduce repair costs, or streamline the companies save on their maintenance expenditure and even
recall process. If problems are of a more serious nature and are generate revenue for their services. One of the main advantages
still part of the current manufacturing process, IoT-collected of warranty management is that it helps avoid fraudulent claims.
usage data may trigger the need to change your processes.
For example, a factory equipment manufacturer installed
For example, a manufacturing unit unwittingly produced faulty temperature and humidity sensors on its products to detect the
goods that were undetected in the testing stages. However when conditions under which the units were being used. On receiving
customers started to use them, the attached noise sensors a call from its client for maintenance during the warranty
immediately sent notifications to the manufacturer about out- period, the manufacturer checked the conditions using the data
of-spec noise levels. This data prompted the company to test collected by the sensors and found that the company was not
the product again, and they found the problem. The company adhering to the parameters set in the warranty conditions. Due
immediately recalled all of its batches, the fault was rectified in to this, the company informed the client that the warranty's
the manufacturing unit and replacement products were delivered conditions were not met and repairs would mean an additional
to their customers. charge for the client.

Dynamic Route Planning Data Integration and Business Process Efficiency


Manufacturing units use a GPS-based vehicle tracking system to The value of the real-time, accurate data collected by the
collect accurate location data of their delivery vehicles in real- sensors and systems in an IoT-enabled smart factory can add
time. This data is collected at a centralized location and can be value to processes almost everywhere in a business. This data
analyzed for optimizing delivery routes by suggesting the best or can be pulled into data warehouses to be used in systems such
an alternative route to the driver. Various factors such as traffic as customer relationship management (CRM) and enterprise
situation and road conditions can be taken into consideration resource planning (ERP) systems for financial or other analysis.
before suggesting another route to ensure faster delivery of the Real-world data on usage patterns or equipment issues can
consignment. be integrated into quality assurance (QA) or product lifecycle
management (PLM) systems, helping improve customer
For example, a company uses dynamic route planning to deliver
satisfaction and streamline beta programs.
their goods to retailers as fast as possible. Location data is
collected on the cloud and is analyzed by a team to ensure that The following table shows business processes than that can be
the stores that need to replenish their inventory immediately impacted by IoT data and the benefit that can be derived.
receive delivery prior to those that have some remaining stock.
The team also takes into consideration the traffic situation
through reliable applications and suggests new routes to the
vehicle drivers to save time and fuel.

Leverage the Internet of Things to Set Up a Smart Factory 5


BUSINESS PROCESS MEASURE BENEFITS
Customer service Length and frequency of support calls Effective troubleshooting and CRM efficiency increased
Proactive creation of field service request with accurate
Field service Time to resolution
data and health status
Number of warranty services, Reduction in warranty service costs and data on
Warranty management
warranty costs warranty compliance
More efficient recalls with accurate data on which
Recall management Support cases of recalled products
product needs to be recalled
Consumable management Consumable revenue Increase in sale of consumables
Reduced costs through more efficient auditing of
Compliance Cost of compliance
interactions with machines and humans
Accurate data about installed equipment and
Configuration management Cost of configuration management
configuration

35% 34% 38%

35% of manufacturers in 34% of manufacturers About 38% of them have


the US have started utilizing currently believe that it is already installed sensors in
data collected by smart critical to adopt the IoT to their goods to allow users to
sensors to streamline the optimize operations gather sensor-generated data
manufacturing process

http://www.themanufacturinginstitute.org/~/media/659A17245F6F4375BCCE889079427CB6/Data_Driven_Manufacturing_Whitepaper.pdf

ESSENTIAL COMPONENTS FOR IoT NETWORK CONNECTIVITY


IN MANUFACTURING Internet connectivity has become more reliable and affordable,
While machine-to-machine communication has been around allowing manufacturers to deploy it in their units. Companies
for a while now and a number of manufacturers have leveraged interested in implementing IoT in their factories have a whole
it, IoT remains a new concept due to its components. With range of network standards to choose from. Existing standards
advancement in technology, this industry is growing quickly and such as Bluetooth, Wi-Fi, BLE, RFID, ZigBee, Z-wave and IPv6
offering essential components at relatively low costs, making it are now widely used in IoT-enabled factories. Other emerging
easy for all types of manufacturers to adopt it. standards promoted by some device manufacturers include
6LoWPAN, Weightless and 802.11ah. Choosing the right
networking standard depends upon several factors such as
SENSORS device compatibility, your existing infrastructure and your IT
Sensors are the driving force behind the IoT ecosystem in team's expertise with the standards.
manufacturing. They collect and consolidate data in real time and
have the ability to integrate with direct database systems, legacy
ERP systems or data warehouses.

Leverage the Internet of Things to Set Up a Smart Factory 6


IoT PLATFORM THE IoTCONNECT PLATFORM
The most important part of a smart factory is the IoT platform. IoTConnect is a multi-purpose middleware platform developed
Before implementing an IoT integration plan, it is very important on open source technologies. As shown in the figure below,
to ensure that you have a compatible open architecture in this horizontal IoT platform-as-a-service (PaaS) system allows
place and that any M2M applications you consider meet your for device communication and management, data storage,
digital business requirements. Take a strategic approach to your app creation and enablement, robust security protocols and
IoT initiative to avoid such critical issues as a security breach implementation of data science methodologies.
or interruption in connectivity. Choosing an appropriate IoT
IoTConnect gives factories the following capabilities:
platform is an integral step in an IoT strategy, as it will facilitate
monitoring and control different data points from a variety - Manage multiple connected devices
of sensors.
- Set up cross-device connectivity
An IoT platform connects access points and data networks to
- Data visualization reports
end-user applications, allowing you to automate processes and
analyze data. In other words, IoT platforms act as middleware - Perform remote device provisioning and configuration
solutions that connect the data collected at the edge to the
- Perform real-time device monitoring
user-facing software-as-a-service (SaaS) or mobile app. An IoT
solution will include many functions, such as: - Distribute over-the-air firmware updates
- Sensors and controllers - Create cloud services for smart products
- A gateway device to collect data and send them back to the server - Collect and analyze sensor data
- A communication network to transmit data - Analyze user behavior and deliver targeted notifications
- Data analytics and data visualization software The main benefits that factories gain from IoTConnect include
integration, deployment, security, automation, interoperability,
- A user facing application
and access.

IoTConnect™
Smart Office - Smart Buildings - Smart Energy
Smart Manufacturing - Smart Retail
Smart Occupancy - Smart Healthcare
Predictive Maintenance - Remote Monitoring

DATA VISUALIZATION
CONNECTORS

PHYSICAL THINGS

SMART PORTAL
Smart Rules
Notifications
SMART SDK Things Management
VIRTUAL THINGS
Data API - DataLake
Social Media Feeds

ANALYTICS

SDK BRIDGE
AUTHENTICATIONS MOBILE APPS
& VERIFICATIONS

Leverage the Internet of Things to Set Up a Smart Factory 7


FLAWLESS FASTER OPTIMUM CENTRALIZED
AUTOMATION INTEROPERABILITY
INTEGRATION DEVELOPMENT SECURITY ACCESS

Enterprise grade Accelerate time to Single point for


Create new processes Operate and
integration Secure data received market, reduce cost adapting protocols
with ease and add maintain device
mechanisms ensure from all sources of deployment and and data models
business applications and data tasks by
easy adaptation of your IoT ecosystem maintenance costs for gathering the
through common automating business
existing workflows, with state-of-the-art of IoT solutions by information and
interfaces for faster processes and save
business processes and data security systems. utilizing interoperable managing the
development. management costs.
information systems. technologies. communications.

DATA ANALYTICS AND VISUALIZATION TYPES OF SENSORS


Data analytics is the science of analyzing large amounts of data Sensors throughout the production unit monitor critical processes,
to uncover patterns and other insights that may be overlooked environmental variables and parameters that affect product
by humans. The concept of analyzing big data is not new, but the quality and working conditions for the employees. These
availability of cloud-based storage and analytics tools such as sensors include:
Microsoft Azure and Amazon Web Services among others means
- Temperature sensors (manufacturing process)
that even medium-sized manufacturers can now take advantage
of data analytics. - Carbon emission sensors (manufacturing process,
environmental emission)
The data that has been gathered needs to be converted into
easily understood graphs and reports. With interactive data - Humidity sensors (storage/warehouse conditions)
visualizations you can conceptualize future business strategies
- Noise sensors (worker conditions, compliance)
by drilling down into charts and graphs. Data visualization tools
are used by companies to identify new patterns by explaining - Vibration sensors (machine monitoring)
concepts clearly and deeply. Some of these tools are Tableau,
- Micro sensors and equipment tags (manufacturing process,
D3.js, Power BI and R.
machine monitoring)
Tableau is an effective tool to quickly create interactive data
- Occupancy sensors (resource management, workers` safety).
visualizations and to explore and find patterns with various
Typical occupancy sensors include:
combinations. Its simple interface can be used by anyone as
this tool is designed to be used by developers as well as • Passive infrared sensors (pir)
non-developers.
• Ultrasonic sensors
D3.js is a JavaScript library that is used for data visualization.
• Microwave sensors
It is used to convert unstructured data collected from various
sources, such as government databases, social networking, • Motion sensors (workers' safety)
eCommerce portals, etc., into a more usable or productive form.
• Fire and smoke sensors (workers' safety, machine
Power BI allows developers to create accurate visualizations and monitoring)
display data in different ways with minimum effort. The Power BI
Desktop includes a variety of standard visualizations, including a CHOOSING THE RIGHT IOT PLATFORM
range of reports that companies usually need.
The gap between the device sensors and data networks is
R is a popular statistical language that is used with Power BI as bridged using an IoT platform with the help of back-end
well as Tableau to perform statistical and predictive analytics. This applications to manage the data generated by hundreds of
includes statistical tests, time-series analysis, linear and nonlinear sensors. Choosing the right platform can be challenging as there
modeling, classification, clustering and more. are many device clouds in the market today which are often
classified as IoT platforms.
BUSINESS CASE OF IOT IN MANUFACTURING
WEB AND MOBILE APPLICATION
Every manufacturing company operates production lines that
consist of many critical processes, many of which can benefit This is an intelligent dashboard that is the part of the system
from IoT. For example, manufacturing controls require continuous most visible to you and gives you direct access to information as
measurement of environment variables such as temperature and well as analytics, graphs, and historical data. Mobile applications
pressure. Compliance regulations make it necessary to provide give you real-time updates by means of alerts and notifications,
safe working conditions for its employees such as controlled and with smart sensors you can send commands back to the
noise levels, water quality and more. devices to remotely operate them. This makes it extremely easy
for you to maintain your policies and compliance standards.

Leverage the Internet of Things to Set Up a Smart Factory 8


THE IOT-ENABLED SMART FACTORY HELPING YOU CREATE YOUR SMART FACTORY
To complete the picture, we will describe a working factory Converting into an IoT-enabled smart factory is a big step. To
featuring all the advanced components of IoT. help you with this transition, we can provide a systematic and
gradual implementation plan, starting with an exclusive workshop.
A smart factory leveraging IoT will install multiple sensors to
This workshop is a joint brainstorming exercise for us to:
detect temperature, humidity, noise, light, vibrations and volatile
organic compounds in its factory. The factory also has specialized - Understand your business vision and core processes
sensors to track the working of all of its machines and equipment, - Understand critical junctures and transitions within
to identify the location of vehicles which carry raw materials and the organization
finished goods as well as to manage the supply chain.
- Learn your existing infrastructure and setup
The data collected by all these sensors is transmitted to a
cloud-based storage system. There, principles of data science - Identify and locate critical parameters, their permissible values
are applied in order to get meaningful information and gain and the implications of violations in the overall system
insights that are presented in the form of interactive reports and - Understand your business rules, policies and standards
charts. Managers and other authorized employees access these
- Know about existing legacy systems (ERP, CRM etc.) and how
data visualizations from the cloud to supervise and manage the
data flows between various departments
working of their respective departments.
With the information we will learn from each other in the
This information is used to maintain the right temperature,
workshop, our experts will help identify:
humidity, light and noise levels in the manufacturing unit, along
with ensuring compliance with safety standards. The IoT and data - Entities and processes in your company that can be improved
science ensure that any defects are detected in the early stages or automated through IoT
and downtime can be prevented, and the machinery is easily
monitored and maintained if faults are detected. - How to control the critical parameters in permissible ranges
- How rules, policies and compliance standards can be improved
Vehicles are monitored in real-time to ensure that the finished
goods are delivered to distributors and retailers on time. - What infrastructure changes can be brought in to keep overall
Employees are made aware of the arrival of raw materials well in costs to the minimum
advance and are prepared to start production right away in order
to avoid wasting time. New or alternative routes are suggested - How legacy systems can be more efficient and seamless by
to drivers in order to ensure that they reach their destination directly passing data from sensors to systems
without wasting time and fuel.
CONCLUSION
Managing the inventory is easy for the manufacturer, as they
know exactly when to order required raw materials just in time, IoT is a driving force for manufacturers today. Avnet can be your
avoiding costs for storing goods any longer than necessary. technology partner and help you stay ahead of your competition
Low stock will trigger order reminders to avoid delays in in this fourth industrial revolution. With advancement in smart
the production of goods. IoT also connects the factory to sensors and cloud technologies, companies can enjoy more
warehouses, distribution centers, retailers, suppliers and intelligent services at a lower cost. The time is now to make your
customers to facilitate supply chain management by allowing company smarter and more efficient than before. Enroll in our
real-time information sharing. workshop to get started.
The smart factory successfully lowers costs by avoiding fuel
and power wastage. Downtime is decreased to a great extent,
allowing uninterrupted production in the manufacturing unit.
Moreover, sensors installed on the finished goods help identify
faults in products, so that they can be rectified as soon as they
are detected to decrease losses and offer quality products
and services to consumers. The factory also saves on
warranty management.

Leverage the Internet of Things to Set Up a Smart Factory 9


ABOUT AVNET
Avnet is a global technology solutions provider with an
extensive ecosystem delivering design, product, marketing
and supply chain expertise for customers at every stage of the
product lifecycle. We transform ideas into intelligent solutions,
reducing the time, cost and complexities of bringing products
to market. For nearly a century, Avnet has helped its customers
and suppliers around the world realize the transformative
possibilities of technology.

LEARN MORE ABOUT AVNET AT


WWW.AVNET.COM.

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