Vertical Market Spotlight - IoT in the US Manufacturing Industry, an End-User Perspective

  • ID: 4439493
  • Report
  • Region: United States
  • 95 pages
  • Frost & Sullivan
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In the overall Internet of Things (IoT) market, industrial applications have gained the most traction, as traditional systems are in need of automation to collect data and prevent downtime in systems. In the manufacturing sector, applications such as asset monitoring and supply chain or logistics are being implemented globally, as manufacturers seek improved operations and data collection. Connecting older machines would require investments in the millions. Most manufacturers amortize these machines over many years. As the majority of manufacturers are small, with fewer than 500 employees, investment in redesigning factories or purchasing connected machines is not an option. However, these manufacturers are looking for low-cost solutions to collect data from machines and automating the process to reduce downtime and unplanned maintenance. Keeping these factors in mind, this study aims to understand customer motivations and purchasing behavior for IoT solutions in the manufacturing sector.

The manufacturing industry has been very receptive to implementing smart IoT solutions to improve productivity and reduce waste. Between April and June 2017, Frost & Sullivan conducted an end-user survey to understand the motivations behind implementing these solutions and types of technology that customers were looking to procure. This study is a culmination of these efforts to better understand the customers in manufacturing and provide insights to vendors and service providers looking to sell IoT solutions to this industry. The survey covered 150 respondents in North America over process and discrete manufacturing, and includes breakdown by small, medium and large manufacturers. One key finding is that Smart IoT solutions are perceived mainly as a way to achieve operational efficiency, effectiveness, and overall competitiveness. About 1 out of 2 companies is driven by a desire to be on the cutting edge of manufacturing technologies and to be more responsive to market conditions.

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1. Executive Summary

  • Summary of Key Findings
  • Key Findings by Company Type
  • Key Findings by Company Size
  • Growth Opportunities for Solution Providers Developing Smart IoT Solutions in Manufacturing

2. Research Objectives and Methodology

3. The Growth and Cost Profile of Organizations

  • 4 Out of 10 Companies Reported Achieving ‘Above Average’ Growth in the Last 3 Years
  • A Large Proportion of Medium and Large Companies Report Achieving Above Average Growth in the Last 3 Years
  • Majority of the Companies Report that their Overall Operating Cost Structure is on Par with the Industry Average
  • There is More Variance in the Cost Structure of Large Organizations, with 16% Having Lower Costs and 20% Higher Costs

4. Challenging Areas of Manufacturing Operations

  • Quality Control, Supply Chain Management, Materials Management, Inventory Management, and Logistics and Transportation are the Most Challenging Areas within Manufacturing Operations
  • Quality Control is he Most Challenging Area for Discrete Manufacturing Companies. Process Manufacturing Organizations Struggle More with Supply Chain Management
  • Quality Control is More Challenging to Small Companies, While Supply Chain Management is More Challenging to Large Companies
  • Most Companies Implement Training Programs To Overcome Challenges In Manufacturing Operations
  • While Small and Medium Companies Implement Training Programs to Address Challenges, Large Companies Use Technology to Streamline Processes

5. Familiarity with Smart IoT Solutions for Manufacturing

  • One Out of Three Respondents is Very Familiar with Smart IoT Solutions for Manufacturing
  • About 1 Out of 2 Respondents from Large Companies is Very Familiar with Smart IoT Solutions for Manufacturing
  • Overall Familiarity with Smart IoT Solutions for Manufacturing is Higher Among Discrete Manufacturing Companies
  • Overall Familiarity with Smart IoT Solutions for Manufacturing is About the Same Across the Company Size Categories
  • Process Manufacturing Companies Seem to Have Slightly More Challenges in Understanding Smart IoT Solutions (Variability of Understanding Across Business Units and Gaps in Understanding)
  • A Higher Proportion of Large Companies Find Understanding Smart IoT Solutions (Variability of Understanding Across Business Units and Gaps in Understanding) a Challenge
  • More Companies Get Information on Emerging Manufacturing Technologies and Processes within their Industry from Industry Conferences, and Technology and Trade Publications
  • A Higher Proportion of Large Companies Use the Knowledge of Employees (Internal Experts) to Understand Emerging Manufacturing Technologies and Processes within their Industry

6. Drivers for Deployment of Smart IoT Solutions in Organization

  • The Majority of Companies Believe that Smart IoT Solutions Can Help Drive Operational Efficiencies and Effectiveness, and Improve their Competitiveness
  • Expectation that Smart IoT Solution can Help Drive Operational Efficiencies and Effectiveness and Improve Competitiveness is Slightly Higher Among Large Companies
  • The Need to be on the Cutting Edge of Manufacturing Technology and the Need to Improve Responsiveness are Key Reasons for Implementing IoT Solutions
  • Some Difference in Reasons to Adopt can be Observed (Mostly Directional Due to Small Sample Sizes)

7. Deployment of Smart IoT Solutions in an Organization

  • About One-third of the Companies have Already Deployed Smart IoT Solutions for Manufacturing Operations
  • The Level of Deployment of Smart IoT Solution for Manufacturing Operations is Significantly Higher Among Large Companies
  • Smart IoT Solutions, on Average, have been Used for 2 to 3 Years
  • There are no Significant Differences in the Duration of Smart IoT Use Across Company Sizes (Due to Small Sample Size)
  • More Companies Have Implemented Supply Chain Tracking and Equipment and Machinery Management Solutions
  • Security and Surveillance Solutions More Widely Implemented Among Medium-size Companies (Directional Due to Small Sample Size)
  • There are Just Slight Differences in the Types of Solutions Being Considered for Implementation in the Next 12 to 24 Months
  • Integrated Mobile Workforce Management is the Most Sought-after IoT Solution by Medium-size Companies
  • Production Floor, Inventory Management are the Areas that Most Commonly Implement Smart IoT Solutions
  • Asset Management and Compliance are Areas with Relatively Common Implementation of Smart IoT Solutions Among Small Companies, Whereas Medium Use IoT in Personnel and Plant Safety Areas
  • Majority of Smart IoT Aspects are Managed In-house or Through Outsourced Vendors/Consultants
  • A Higher Proportion of Large Companies Manage Smart IoT Solutions in House
  • 1 Out of 5 Companies is Likely to Implement Smart IoT Solutions in the Next 2 Years
  • The Likelihood of Implementing Smart IoT Solutions Increases with the Size of the Company
  • Supply Chain Management, Inventory Management and Quality Control are the Priority Areas for IoT/ Smart Manufacturing Technologies
  • Priority Areas in Implementing IoT Solutions are Similar Among Small and Medium Companies. Large Companies Indicates Relatively More Often the Priority of Asset Management, and Logistics and Transportation

8. Post-Implementation Objectives

  • The Top Objectives that Companies are Likely to Pursue Over the Next 5 Years are Driving Product/Service Quality and Reducing Overall Manufacturing Costs
  • Improving Supply Chain Management Pursued by Higher Proportion of Large Companies
  • A Majority of the Companies have not Fully Realized their Post-implementation Objectives/Outcomes
  • Small Companies are Slightly More Optimistic About the Realization of Objectives
  • Most Process Manufacturing Companies are Still in the Early Stage of Implementation (Too Early to Meet Objectives). Lack of Adequate Resources to Train Employees on IoT is a Key Reason Why Discrete Manufacturing Companies are Unable to Meet Objectives
  • Large Companies Indicate that hey Still at an Early Stage of Implementation. 1 Out of 2 Medium-size Companies Experiences Push-back from External Constituents
  • On Average, Companies Expecting Cost Savings of 15% to 20% from the Deployment of Smart IoT Solutions. The Level of Cost Savings Achieved is a Couple of Percentage Points Lower than Expected
  • Small Companies Expect Slightly Higher Cost Savings from the Deployment of Smart IoT Solutions

9. Level of Satisfaction with Currently Deployed Smart IoT Solutions

  • About 30% of the Companies are Very Satisfied with their Smart IoT Solution
  • Small Companies are Significantly More Satisfied with their Smart IoT Solution
  • About of 30% Respondents are Very Satisfied with their Smart IoT Solution Vendor - The Share of those Satisfied is Higher Among Process Manufacturing Companies
  • A Significant Number of Small Companies Indicated that they are Very Satisfied with their Smart IoT Solution Provider
  • All Respondents Agree that Lower Cost and Post-implementation Support are the Two Most Valuable Assistance that Vendors Could Provide
  • Expected Assistance Types is Generally Consistent Across Company Sizes

10. Concerns Regarding Smart IoT Solutions

  • Selecting the Most Suitable Solution and Upfront Costs are the Most Important Challenges to the Adoption of Smart IoT Solutions
  • Choosing the Most Suitable Solution is he Priority of Small Companies, While Medium-size Companies Consider Software, Implementation Costs, and Security Concerns
  • Uncertainty About RoI and Other Operational Priorities are the Most Important Reasons that Hinder the Implementation of Smart IoT Solutions
  • Lack of Operational Expertise in IT is Highlighted By Separation Between IT and OT Priorities in IoT Deployments

11. The Last Word-Expected trends in Smart IoT Solutions for Manufacturing

  • Opinion is Divided When it Comes to Increase or Decrease in Spending Over the Next 2 Years
  • A Smaller Portion of Large Companies Expect their Overall Manufacturing Operations Budget to Decrease
  • A Majority of the Companies Expect to Increase their Overall Spending on Smart IoT Solutions Over the Next 2 Years
  • All Companies Expect a Change In Spending on Smart IoT Solutions Over the Next 12 to 24 Months
  • Supply Chain and Inventory Management are the Areas Most Likely to Benefit from the Implementation of Smart IoT
  • Medium-size Companies are More Likely to Benefit from Budgetary Planning and Forecasting

12. Appendix-Demographics

  • Average Annual Revenue of Companies s About $1.5 Billion
  • IT Employees Made Up Half of the Sample Size; Nearly Half of Them Hold Managerial Positions
  • Over Half of the Respondents from Small and Medium Companies Were from the IT Department
  • Experience in Manufacturing Operation Management is Slightly Higher in Process Manufacturing Companies; 36% of the Respondents Have an Experience of 15 Years or More
  • Larger Companies Have a Higher Share of Employees with More Experience in Manufacturing Operations Management
  • Legal Disclaimer
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