The Internet of Things (IoT) in the manufacturing industry: A roadmap for beginners

First, what is the Internet of Things (IoT)?

The internet is one thing, but what is the Internet of Things? At its core, the “Internet of Things” (IoT) refers to any network of physical objects that are equipped using internet connection to collect and share real-time data. IoT represents an evolution of machine-to-machine communication, which has been around for decades. With IoT, processing power and connectivity have become so cheap and widespread that the opportunities for physical devices to generate data are endless.

Put in its most simple terms, IoT has given networks of devices an improved way to "talk" and “collaborate” with each other. For small businesses in manufacturing, IoT has the potential to simplify everyday tasks like inventory management and equipment maintenance tremendously. Let’s break down more of the benefits.

3 use cases of IoT in manufacturing

1. Improved operational efficiency

For a small business, one of the biggest arguments for IoT adoption is the ability to streamline operations. Adopting IoT-enabled devices allows a small business to gather real-time insights into everything from equipment health to employee performance. This has the potential to lead to faster decision-making and fewer delays in production and service delivery.

As a real-life example, a small manufacturing company could use an IoT-enabled device to monitor equipment health. A simple smart device typically triggers an alert once a certain threshold has been reached—and often only after a problem has already begun. In contrast, an IoT-enabled device takes into account parameters like temperature, vibration and pressure.  Instead of waiting for a machine to break, IoT gives you the comprehensive picture you need to take action and avoid downtime.

Let the data do the talking: A recent article from Deloitte highlighted how Hershey implemented a 1% improvement in weight precision for packages of Twizzlers using IoT. They were able save over $500,000 for a 14,000 gallon batch! Their new IoT-powered system produced 240 process adjustments per day—compared to just 12 adjustments per day in the previous set-up. Talk about savings! If you’re a small business owner, you know that even a minor adjustment in efficiency can pay off.

2. Better supply chain management

IoT devices can revolutionize the way small businesses handle inventory. By using special tags that can communicate wirelessly (called RFID tags), you can track stock real time. IoT systems can automatically reorder items when they run low, helping you avoid running out of products or having too much on hand. In this way, having an IoT-enabled device is like having a smart assistant that keeps track of your supplies and ensures you’re always prepared.

Let the data do the talking: According to research from McKinsey, IoT-enabled supply chains are expected to reduce inventory costs by 20-30%. That’s an incredible amount of money back in your pocket! By improving tracking and accuracy, you have the potential to better control your inventory, reduce waste, and improve cash flow.

3. Energy management and cost savings

Efficient energy management not only helps the environment but also offers the added benefit of saving you money. IoT can be a powerful tool in this space! IoT-enabled thermostats, lighting systems, and energy meters can help monitor and control energy consumption in real time.

These devices allow businesses to automatically adjust settings based on occupancy, weather, or time of day, reducing unnecessary energy use. Over time, this leads to significant savings on energy bills, which is especially important for small businesses operating with tight margins.

Let the data do the talking: Analysis from the World Economic Forum shows that 84% of current IoT deployments “are addressing or have the potential to address” the UN’s Sustainable Development Goals. IoT technology has the potential to minimize environmental impacts and at the same time deliver cost savings for small businesses.

How to get started with IoT in your small manufacturing business

Adopting IoT doesn’t necessarily involve a heavy investment in expensive equipment. Start small, focus on areas where IoT can have the greatest impact, and gradually scale up as you see results. Here are three steps to get started:

1. Identify pain points: Look for areas of your manufacturing processes that could benefit most from IoT—whether it's equipment maintenance, inventory management, or energy monitoring.
2. Start small: Begin by implementing simple IoT solutions that can bring immediate benefits, like an RFID tag for inventory.
3. Analyze data: Make sure you have a system in place to help you collect and analyze the data and measure the success of your IoT implementation.

IoT in manufacturing: Within reach!

Aligning the power of the Internet of Things with your manufacturing operations offers a wide range of possibilities. With the right strategy in place, IoT can be an affordable and impactful way to stay competitive: improving efficiency, strengthening supply chain management, and permitting smarter energy usage.

As IoT continues to evolve, the opportunities for small businesses will only increase. Now is the perfect time to explore what IoT can do for your business.