Internet of Things-Value Creator for End Users and Suppliers Alike

The reliability of your process manufacturing and production operations directly impacts overall safety, availability and profitability. In an earlier post, Integrating Reliability Practices for Top-Quartile Performance, we highlight how reliability translates into better performance.

I share this as background for an ARC Advisory Group Industrial IoT/Industrie 4.0 Viewpoints blog post, IoT Changes Logistics for the OEM Spare Parts Supply Chain. Author Ralph Rio highlights how the underlying technology of IoT is available, supported by major technology providers, and delivers value to original equipment manufacturers (OEMs) and end users alike.

From an OEM’s perspective:

By offering IoT-enabled condition monitoring, spare parts, and equipment repair services, equipment OEMs can remotely monitor asset health in their customers’ plants, anticipate failures, order the parts, and often execute repairs before the failure occurs. This provides an ongoing, services-based revenue stream for OEMs, while enhancing customer uptime and overall satisfaction.

From end user perspective, unplanned downtime from equipment failure means:

  • Higher costs with work-in-process (WIP) material waste and scrap
  • Labor losses with idle time, rework, and clean-up
  • Missed production schedules with delayed shipments, customer satisfaction issues, lost orders, and lower revenue
  • Higher business risks with potential safety and environmental incidents

Ralph recommends:

Listen to your “inner geek,” and consider the potential impact of the Internet of Things on your business

  • For OEMs, consider the broader benefits of IoT beyond revenue enhancement for services, and examine the optimization of inventory and depots for addition business improvements
  • For end-users, include IoT, remote monitoring, and predictive maintenance in the selection criteria for new equipment to reduce total lifecycle cost

Emerson's Will Goetz


I caught up with Emerson’s Will Goetz who shared this post with me. He agrees that remote monitoring services performed by OEMs is a proven business model for critical assets like combustion turbines and even for less critical assets that have redundant spares such as pumps.

Will notes that commercial challenges exist for OEMs providing less critical assets. For example, imagine an OEM telling a plant manager that he needs to take an asset out of service! To be viable as a business, contracting will need to include liquidated damages in both directions.

While spare parts costs may be lowered by OEMs who provide remote monitoring services, it is important to note that reduced spares are available to anyone who chooses to manage reliability internally.

One final point is that this pervasive sensing enabled by IoT technologies combined with remote experts can deliver still greater value it if done holistically by the end user or common provider of reliability consulting and services. The holistic approach will enable deeper insights into operating conditions across the process than is possible with a piece-by-piece approach from different suppliers.

You can connect and interact with other reliability and maintenance experts in the Reliability & Maintenance group in the Emerson Exchange 365 community.

Posted Friday, September 11th, 2015 under Asset Optimization, Industrial IOT, Reliability.

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