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Top 6 findings from IoT Signals: Manufacturing Spotlight

If you want to gain an edge in today’s dynamic manufacturing world, your organization must be agile, resilient, and sustainable. In this shifting landscape, many manufacturers are investing in innovative solutions to make their products and operations smarter by tapping into advanced technologies such as the Internet of Things (IoT), AI, and digital twins for manufacturing.

Against this backdrop, Microsoft decided to spotlight the manufacturing industry for our August 2022 IoT Signals report. IoT Signals is a series of impactful thought leadership content curated by Microsoft to inform the community about the latest developments and technology trends in the IoT industry. The first report, published in 2019, provided a broad view of IoT across a variety of industries—from manufacturing and energy to healthcare and retail—based on comprehensive, survey-based research.

For this edition of the report IoT Signals: Manufacturing Spotlight Microsoft, Intel, and IoT Analytics surveyed 500 decision makers working on digital transformation initiatives in discrete, hybrid, or process manufacturing across North America, Europe, and Asia Pacific. We conducted more in-depth interviews with some participants to gain a deeper understanding of their transformation strategies, execution plans, and challenges.

Six key findings about digital transformation and IoT in manufacturing

This new IoT manufacturing report reveals insights from real-world manufacturers that have started their digital transformation journey. It also uncovers fresh learnings about the state of industrial IoT devices and technology in manufacturing, specifically in the areas of manufacturing operations and smart products.

During our research, we discovered six key digital transformation and IoT manufacturing trends:

  1. Most manufacturers are advancing their efforts to build smart factories. Three out of four survey respondents (72 percent) said they’re implementing their smart factory strategy.
  2. Operational improvement is still a top goal for manufacturers. Four out of five survey respondents said they consider overall equipment effectiveness (OEE) to be the most important key performance indicator to measure the success of their smart factory strategy.
  3. Organizations are shifting investments to industrial automation-based process control. To date, most manufacturers have focused on quality control and condition-based maintenance for smart factory projects. However, the need for greater agility is leading these organizations to shift their investments over the next three years to industrial automation-based process control—the use of automated control systems, such as IoT and AI, to automate manufacturing processes.
  4. Manufacturers face new challenges with scaling smart factory initiatives. Half of the respondents said they face challenges in developing new software applications, and the majority (eight out of 10) said they’re dealing with skills gaps, particularly in data science, AI, and cybersecurity.
  5. IT-OT convergence is happening in the manufacturing industry. With 76 percent of manufacturing assets now connected, many manufacturers are moving workloads and applications from on-premises infrastructure to public and private cloud platforms.
  6. Manufacturers plan to increase investments in smart connected IoT products. Manufacturing organizations are not only optimizing their own operations with smart connected IoT products—they’re also creating new revenue streams by selling these products to customers. Manufacturers that already sell connected IoT products expect to increase investments from 33 percent today to 47 percent by 2025, with a strong focus on value-added services, such as predictive maintenance and remote support.

Read the IoT Signals: Manufacturing Spotlight to learn more about what’s driving these six key trends and holistic understanding of six key components of digital transformation in manufacturing.

The six key trends and a holistic understanding of six key components of digital transformation in manufacturing.

Accelerating digital transformation and embracing IoT with Microsoft Cloud for Manufacturing

All six of the key findings from this manufacturing IoT report share a common theme: Manufacturers across the globe are advancing their digital transformation efforts. These organizations are tapping into innovative solutions to reimagine manufacturing and build a more resilient and sustainable future.

By adopting transformative technologies like IoT industrial devices, AI, and digital twins, your manufacturing organization can:

  • Transform your workforce. Eight out of 10 manufacturers report having at least one important skill gap, particularly when it comes to advanced data analysis and IT cybersecurity. In this environment, manufacturers are looking for tools that will help them close the gap and boost employee productivity. Today’s manufacturers can transform their workforce by empowering their frontline workers with digital tools and modern devices that enable real-time collaboration, enhance training, and improve worker health and safety.
  • Build more agile factories. The ability to adapt quickly to rapid change is a defining factor between manufacturers that simply survive and those that thrive. That’s why manufacturers across the globe are tapping into advanced technologies to build more agile, smarter factories.
  • Create more resilient supply chains. According to the report, 74 percent of manufacturers ranked supply chain resilience as a top priority. This is no surprise considering that, now more than ever, manufacturers are under pressure to prevent and minimize supply chain disruptions. Microsoft Cloud for Manufacturing is already helping manufacturers improve end-to-end supply chain visibility and boost supply chain resilience.
  • Engage customers in new ways. If you want to gain an edge in the manufacturing industry, customer engagement is critical. As manufacturers search for innovative ways to engage customers, many are selling smart connected IoT products. Our research shows that 33 percent of manufacturers’ product revenue comes from smart products today.
  • Drive innovation and deliver new services. Manufacturers are investing in advanced technologies to create a more resilient future. According to our research, 28 percent of manufacturers have rolled out digital twins, and four percent of them have fully deployed them in their factories. Another 45 percent of manufacturers are in development and proof of concept (POC) stage for digital twins, and 39 percent are in the same stage for augmented reality (AR).
  • Decrease your environmental impact. Most manufacturing board members (59 percent) believe that decreasing their carbon footprint is an important area of focus. Manufacturers are uniquely positioned to drive sustainability while saving costs and improving safety using cloud-based automation, machine learning, and AI.
  • Improve security. Security is a top priority for manufacturing organizations, and 62 percent of manufacturers have strict data privacy policies. Over the next three years, manufacturers plan to decrease the mean time to detect cybersecurity incidents by 30 percent.

Build a resilient future with IoT manufacturing

Manufacturing organizations are drawing from the lessons learned during COVID-19 to develop resilience and build a better future. Digital transformation continues to be top of mind for these manufacturers as they work to increase agility, improve customer engagement, and drive growth. To gain insights from the digital transformation journeys of real-world manufacturers, read the IoT Signals: Manufacturing Spotlight report.