Untapped Potential – Helping Australian Manufacturers to Realise the Benefits of IoT

Maintaining profit margins has become increasingly difficult for Australian manufacturers. From rising costs to supply chain disruptions and staff shortages, the past 12 months have seen an array of new challenges emerge in an already hyper-competitive industry.

Smart technology, enabled by the Internet of Things (IoT), artificial intelligence (AI), automation, and data analytics, offers Australian businesses the potential to streamline processes, optimise resource utilisation and drive productivity gains.

But with smart warehouse facilities costing anywhere up to $25 million AUD, Australian manufacturers need to be smart about how and when to integrate smart technologies to their warehouse and supply chains.

New risks for Australian manufacturing

Australian manufacturing industry faces several significant challenges that impact its growth and competitiveness.

1. Managing costs and complexity
2. Being predictable and transparent
3. Transforming and supporting the workforce

1. Managing costs and complexity

Australia has relatively high labour and energy costs – as well as stringent regulatory compliance requirements – compared to many other countries. These factors have meant higher production costs for Australian manufacturers, making it challenging to compete on price in global markets. But these prices have surged in the last year, with shipping costs now double what they were a year ago and raw materials becoming more expensive.

2. Being predictable and transparent

Manufacturers rely on complex global networks for raw materials, components, and finished products – but the COVID-19 pandemic highlighted the vulnerability of these supply chains. Improving supply chain resilience and achieving end-to-end visibility is key to mitigating the risks for Australian manufacturers.

3. Transforming and supporting the workforce

In an industry where finding the right skills has always been challenging, the worsening labour crisis has left huge gaps. Globally, there will be an estimated 85 million vacant skilled roles by 2030 – a significant threat to manufacturing businesses, which require expertise in advanced technologies, automation and digitalisation. Businesses need to tackle both the long and short-term gaps in their workforces to address this challenge.

How are manufacturers using IoT and smart technologies?

As a Microsoft Inner Circle partner for 19 years, HSO works closely with Microsoft to keep a pulse on the key digital challenges for Australia’s core sectors. Microsoft’s most recent research into how manufacturing is adopting IoT and smart technologies resulted in an eye-opening report: IoT Signals Manufacturing Spotlight.

Drawing upon selected interviews and survey data from 500 manufacturing professionals across the globe, the IoT Signals Manufacturing Spotlight report explores the driving forces of digital transformation and companies’ immediate plans and key challenges.

The report highlighted 6 key findings:

1. Manufacturers are accelerating their Smart Factory efforts post-COVID-19

Nearly three-quarters of the respondents (72%) have scaled from the proof-of-concept (PoC) stage and are in various stages of implementing their Smart Factory strategy. Their improvement ambition for the next three years is 66% higher than the level of improvement they have already achieved in the previous three years.

2. Operational improvement remains the biggest goal

Four out of five manufacturers consider overall equipment effectiveness (OEE) to be the most important KPI to measure the success of their Smart Factory strategy. They expect the biggest improvements in the next three years to occur in cybersecurity, sustainability, and quality.

3. Investments are shifting to industrial automation-based process control

Quality control and condition-based maintenance have been the focus of most Smart Factory projects to date. The need for greater agility and modularity is leading manufacturers to shift their investment focus in the next three years toward industrial automation-based process control (e.g., investments into industrial gateways connected to the cloud and software-based PLCs). They plan to increase these investments by 29%.

4. Challenges to scaling Smart Factory initiatives are changing

Manufacturers have overcome previous challenges related to getting data from assets and interfacing with cloud infrastructure. Today, half of the respondents face challenges in developing new software applications. Eight out of 10 of the respondents report having at least one very important skill gap, with the biggest relating to data science, AI, and cybersecurity.

5. IT–OT convergence is happening

With 76% of manufacturing assets now connected, many workloads, as well as applications, are moving away from on-premises infrastructure to public and private cloud deployments, especially the latter. Software-as-a-Service is becoming the dominant type of deployment. At the same time, IT tools such as containers are making their way onto edge hardware and into factories.

6. Strong investments in Smart Products are expected

Manufacturers not only optimise their own operations but also, in many cases, realize new revenue streams from smart connected IoT products sold to customers. Those that already sell Smart Products expect their share to increase from 33% today to 47% by 2025, with a heavy focus on value-added services such as remote support or predictive maintenance.

(These insights are taken from the Microsoft IoT Signals Manufacturing Spotlight – you can access the full report here).

HSO – Keeping Australian Manufacturers Competitive

For Australian manufacturers, the message is clear – in a highly competitive global industry, the rest of the world is already beginning to take advantage of IoT and smart technologies. To avoid being left behind, Australian businesses need to start planning and implementing their digital transformation strategies today.

At HSO, we’ve helped some of the leading manufacturers – including Bossard, AB Agri, Terberg and Williams Formula 1 – to modernise business operations, adopt intelligent automation, deliver real-time performance insights and connect the enterprise – accelerating the impact of digital transformation. Here’s how we helped Bossard to pave the way towards it’s 2031 growth targets.

Future-proofing Bossard for long-term growth

Bossard is a global specialist for high quality screws, fasteners, logistics systems and application engineering. In 2021, Bossard’s CIO, Georg Meyer, was tasked with an IT transformation to help the company to achieve its vision for growth by 2031. Operating a $995-million business across 32 countries, Bossard’s core ethos is ‘proven productivity’ – which it maintains with ultra-efficient logistics and minimal errors.

To help achieve its ambitious goals, HSO worked collaboratively with key Bossard stakeholders to design solutions using various Microsoft technologies, including:

• cloud (Azure)
• operations (Dynamics 365 and Power Platform)
• productivity platforms (Microsoft 365)
• data and analytics (Azure data lake and Power BI)

By unleashing the full power of Microsoft Dynamics 365, along with proper implementation from HSO, Bossard is set to make its assembly operations around the globe more productive and sustainable – on track for its 2031 growth target.

Helping to Accelerate IoT in Manufacturing

Smart technology has the potential to completely transform Australian manufacturing businesses. By embracing IoT, AI, automation and data analytics, manufacturers can unlock new levels of efficiency, productivity and competitiveness. But understanding where and how to implement these technologies is the biggest hurdle.

With the global manufacturing sector poised to take advantage of IoT, Australian manufacturers need to enlist the help of experienced experts – like HSO ANZ – to navigate and keep their transformations on track.

The future of manufacturing is smart, and the time to embark on this transformative journey is now.