The Internet of Things (IoT) in Discrete Parts Manufacturing

 Published On: Nov, 2017 |    No of Pages: 194 |  Published By: BCC Research | Format: PDF
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The global market for IoT discrete parts manufacturing was valued at $643.9 million in 2016. This market will grow from $862.6 million in 2017 to $2.8 billion by 2022 with a compound annual growth rate (CAGR) of 26.7% for the period of 2017-2022.

Report Includes

-An overview of the global market for Internet of Things solutions in discrete parts manufacturing
-Analyses of global market trends, with data from 2016, estimates for 2017, and projections of compound annual growth rates (CAGRs) through 2022
-Insight into how new technology shaped by requirements for IoT applications will create new product categories or bring new life to existing products
-A look at factors driving the market, such as lower power and longer battery life, improved networking capability, advanced software solutions, and increased access to real-time data
-Coverage of applications, including automotive and transportation, aerospace and defense, consumer goods, electronics, heavy machinery, high technology, and power plants
-Profiles of major players in the industry

Study Goals and Objectives

This report characterizes and quantifies the global market for Internet of Things (IoT) solutions for discrete parts manufacturers. Historically, factories have relied on autonomous, proprietary solutions to create goods. Rather than view the enterprise operation as a whole, managers were only able to see part of the whole. Information was locked away in a variety of systems that did not communicate, leading to inefficiencies in product design, production and customer service.

Managers have been searching for more integrated approaches to creating, delivering and servicing their wares to customers. IoT technology has the potential to tie all of the different elements into a cohesive whole. The technology’s potential impact is significant and game changing. The goal of this report is to provide an understanding of the market factors, state-of-the-art developments, economic influences, and deployment challenges driving the IoT market. The report analyzes the major components (hardware, software and networking), their potential influence of discrete parts suppliers.

The report contains information useful for planning production and targeting market efforts for delivery of IoT solutions. Trends in IoT automation are investigated, particularly the rise of intelligent sensors, which are pushing intelligence to the network edge; the challenges in connecting different systems; and the managerial hurdles companies need to clear in order to deploy the technology. Projections are provided for the total market through 2022, along with estimates of the market in terms of dollar revenue for vertical sectors alone and the cumulative totals for the market overall. The report quantifies the difference in revenue for equipment in three major categories: hardware, software and networking.

Reasons for Doing This Study

Several forces are driving trends toward increasing levels of automation of the systems that provide essential discrete parts manufacturing services. Higher levels of automation are becoming available, which enable suppliers to control their operating costs, enhance productivity, improve product quality, develop new services, and ensuring competitiveness in a global, dynamical, highly competitive market.

The development, proliferation and flexibility of small new microprocessor-based sensors along with the emergence of standard network protocols has presented manufacturers with an opportunity to gather more performance information and automate manual processes. Traditionally, pricing constraints limited visibility into the performance of elements, like sensors and Programmable Logic Control systems, in the manufacturing process. Smaller, smarter, less expensive sensors; standardized network protocols and increasingly sophisticated software are coalescing and providing manufacturers with new ways to dramatically improve their business processes.

IoT systems are a great fit with greenfield manufacturing plants. Integrating these solutions into existing facilities promises significant returns but also can be challenging. Discrete parts manufacturers need to deploy a complex infrastructure and retrain employees who might resist change. This study explores the technology trends prompting this new era of factory automation, the major manufacturers of these solutions, and the challenges and opportunities that they present to manufacturers.

The expansion of the overall global IoT discrete part manufacturing market relies on the health of local and international markets. Consequently, sales of these products have been largely seen in the world’s more advanced business epicenters: Europe, the U.S., China and Japan. This study analyzes the different sectors in the manufacturing market: automotive, aerospace and defense; consumer goods; heavy machinery.

Extensive investigation has also been carried out to quantify the size of the market in the three segments to aid marketers, manufacturers, system integrators, contractors and other parties involved in the building automation industry to better present their products and services to the most promising markets.

Scope of Report

The building of IoT solutions include three main components: hardware, software and networking. The markets are broken down into subsets. Hardware consists of sensors, programmable logic controllers, and distributed control systems. Software involves IoT platforms, big data, and security solutions.

Networking is available in wired or wireless configurations.

This report examines the technologies, markets and factors influencing the markets for IoT systems. Markets are forecast based on historical activity and current opportunities; technical advances and challenges; and five subsets of the discrete parts market: automotive and transportation; electronics and computer; consumer goods; aerospace, aviation and defense; and machinery and heavy equipment.

The forecasts presented are for the total available markets. Some discussion is provided that compares actual revenues with market potential. Markets are broken down by technology and sector, and then discussed within the context of technology trends. A detailed analysis of the technology and market potential is used as a basis for estimating world markets for these products. Thorough analyses are carried out of IoT practices, along with trends toward the uptake of solution costs, emerging standards and common practices.

Identification has also been made of the prime decision-maker in the project chain who selects the type and scope of IoT project. Factors influencing the requirements and purchases for the systems are examined, as are national and international responses to global challenges.

Information Sources

This report was prepared based on information gleaned from a variety of sources, including interviews with IoT manufacturing executives, engineers and marketers; standards body representatives; purchasing officers; information technology and operations technology representatives; vendor spokespersons; and national and international government organizations. Much of the market research numbers came from company financial reports; interviews with suppliers who outlined various market trends and company initiatives, and various industry experts. Extensive use was made of the internet, company information and case studies, industry consortiums, industry trade publications and various media outlets. Digital and printed statistics were gathered to quantify and help verify trends in the level of activity in the various market sectors.

The approach taken to quantify the world markets for IoT systems involved several steps. Primary among these was delineating the technologies involved in IoT systems and the companies that produce them. Because the market is evolving, clear boundaries among various categories can be difficult to discern. Autonomous product categories have been shifting as suppliers have been trying to deliver a more cohesive and integrated IoT solution. In addition, vendors have been broadening their product lines, so many offer products in numerous categories. Increasingly, they bundle these systems together to entice potential developers, so divvying up the revenue from different types of products can be difficult. Consultations with various vendors and industry experts helped to break those categories down as finely as possible.

A quantitative understanding was then developed for the characteristics of various industries. In addition, assessments were made of regulatory policies governing with respect to IoT requirements— this step was done with varying degrees of granularity.

A summary understanding of the markets was developed for component systems of IoT solutions. With this information in hand, trade publications and internet searches were performed, along with concurrent interviews with industry representatives, regulators and vendors to discern trends in the extent of implementation of fully deployed IoT systems. This report also focused on activities in specific markets for systems that integrate disparate component systems.

Revenue from the various IoT products comes from two sources, new deployments and factory owners’ decisions to upgrade their plants to become more efficient. Revenue was divided into different equipment sales associated with these projects. These numbers and market drivers were generated from public information based on a variety of sources, including vendor product and company information. Public information from Gartner Inc., Industrial Internet Consortium, International Data Corp., and Wikipedia supplied some of the background material used in the discussion.

The world economy has become increasing complex, volatile and difficult to forecast. The projection numbers used in this report are from various economic monitoring groups, including the International Monetary Fund, the World Bank, the CIA World Fact Book, the United States Bureau of Labor and Statistics, and the United Nations. Input from these sectors was used to complete the five-year market projections. All revenues are expressed in U.S. dollars.


Manufacturing represents a large and vital sector of the world economy. In 2016, global activities generated $75.2 trillion, with the bulk of that revenue coming from three regions: the U.S. ($18.6 trillion); the E.U. ($16.0 trillion) and China ($11.1 trillion), according to the International Monetary Foundation.

The IMF expects the global economy to increase at modest rates, about 3.0%, in the next five years. China is seeing achieving growth of around 6% and more, while the U.S., E.U. and Japan are reaching increases of only about 1% to 2%.

The world economy is quite volatile. In Europe, Great Britain’s decision to exit the E.U. has created repercussions that are expected to impact there soon. In the U.S., the election of President Donald Trump in 2016 and the administration’s decision to pull out of the Trans-Pacific Partnership will impact manufacturing markets. The projections in this report are based on modest world revenue growth and no disruptive events. A major negative event, like the economic downturn in 2008, will lower the growth numbers.

Manufacturing generates $11.1 trillion, accounting for a large percentage of the overall world revenue (14.7%). The majority of the manufacturing income is concentrated in four countries: China ($2.9 trillion), the U.S. ($2.2 trillion), Japan ($1.3 trillion) and Germany ($1.1 trillion), according to the United Nations. Markets have been growing—the United Nations World Manufacturing Report reported growth of 2.6% in 2016 and expect even higher numbers in 2017. Developing countries have small manufacturing bases but are investing in infrastructure as well as education and changing regulations in order to spur economic growth. Consequently, their manufacturing output is increasing at high rates. Developed nations with larger bases and mature markets are seeing slower growth.

The Internet of Things is game-changing technology, one that will dramatically impact the industrial automation market. The potential is enormous as technology has driven change in many markets. However, IoT technology is extremely complex and in a nascent stage of development. Consequently, it will make its impact slowly. First, IoT will be implemented in greenfield operations. As the benefits are seen and technology improves, it will then be used in existing plants.

Product Breakdown

In this report, the IoT market is categorized into three product areas (hardware, software and networking) and five vertical markets (automotive and transportation; electronics and computers; consumer goods; aerospace, aviation and defense; and heavy machinery). Hardware includes three types of factory floor devices: sensors, programmable logic controllers and distributed system controllers. Software consists of IoT platforms, big data and security. Networking comprises wired and wireless connections. The revenue numbers are for worldwide sales.
Chapter 1: Introduction 1
Study Goals and Objectives 1
Reasons for Doing This Study 1
Scope of Report 2
Information Sources 3
Methodology 4
Product Breakdown 4
Analyst’s Credentials 5
Related BCC Research Reports 5

Chapter 2: Summary and Highlights 7

Chapter 3: IoT Market and Technology Background 11
Discrete Parts Manufacturing Industry Trends 12
What is IoT? 13
Things Gain Intelligence 14
The Need to Change 15
How IoT Benefits the Business 15
Going Beyond Machine-to-Machine Communication 16
How Does It Work? 17
Design Options 18
Fitting the Pieces Together 18
Getting a Fresh Start 20
Industrial IoT Applications Have Business Value 21
What Has Driven Manufacturing? 23
Facing IoT Challenges 24
Shortcomings with Legacy Systems 25
Revamping Business Processes 26
A Variety of Devices 26
Embedded System Challenges 27
Getting Everything into Harmony 28
System Limitations 29
A Complex System 29
The Network Architecture 30
The Need for a Central Platform 31
Security Challenges Arise 32
A High Level of Commitment Is Required 34
The Need for Standards 34
Many Different Considerations 35
Meeting the Network Needs 36
IoT Standards Organizations 37
Association for Advancing Automation 38
Association for Manufacturing Technology 38
American National Standards Institute 39
Association for Packaging and Processing Technology 39
AVnu Alliance 39
Embedded Linux and Android Alliance 40
International Electrotechnical Commission 41
Industrial Internet Consortium 41
International Society of Automation 42
International Standards Organization 42
Modelica Association 42
MTConnect Institute 43
National Institute of Standards and Technology 43
Organization for the Advancement of Structure Information Standards 44
Organization for Machine Automation and Control 44
Object Management Group 44
OPC Foundation 45
OPX Leadership Foundation 45
PLCopen 45
Devising a Plan 46
A Change in Thinking 47
Finding a Use Case 48
IoT Application Categories 49
The IoT Difference 50
The Connected Supply Chain 50
IoT Applications in Action 52

Chapter 4: IoT Software Market 55
The Emergence of IoT Platforms 56
How IoT Benefits Business 57
Striving for the Ultimate Goal 57
The Need for Developer Talent 58
Reducing Risk 59
Big Data Becomes a Big Force 64
Big Data Challenges 65
Traditional Tools Fail 65
Volume, Variety, Velocity and Variability Define Big Data 66
Making the Right Connection 67
The Need for Master Data Management 67
Big Data’s Many Management Challenges 68
Mining for Gold 69
Truth or Dare 69
What Is Happening Now? 71
Diving Deeper into the Data 71
An Incomplete Picture 72
Parallel Structure 73
The Need for Speed 74
Aggregation Needed 74
Working with Large Data Sets 75
Integrating Data from Multiple Sources 76
Automating the Collection of Data 77
Analyzing Data and Identifying Actionable Insights 78
The Growing Importance of Analytics 78
Making the Right Connection 79
Finding the Right Rule 80
Examining All Options 80
Dynamic Case Management Capabilities 81
Sensing Big Changes 82
The Potential of Edge Data 83
Edge Data’s Many Uses 84
Predictive Analytics’ Tremendous Potential 85
Security Software’s Growing Importance 90
Why IoT Devices are Insecure 91
Building Security from the Ground Up 92
Installing Barriers in Place 93
Security Becomes More Complex 94
The Importance of Application-level Security 94
The Need for Specialization 95

Chapter 5: IoT Hardware 101
Gaining Needed Visibility 101
New Hardware Directions 102
The Impact of Globalization 103
The Role of Embedded Systems 104
Sensors Take Center Stage 105
Distributed Control Systems 109
The Changing Plant Floor 110
The Latest DSC Developments 111
Programmable Logic Controllers 116
PLC Functionality 117
PLC Advances 118
Next Generation PLCs 119
PLC Improvements 120

Chapter 6: IoT Networking 126
Fieldbus, First Generation Industrial Networking 127
Ethernet’s Legacy 129
Ethernet in the Factory 130
EtherNet/IP’s Benefit 131
Seeing Stars 133
Meeting I/O Challenges 133
Monitoring Ethernet Connections 134
Simplifying Configurations 136
Network Optimization 136
Looking Ahead 137
The Impact of Wireless Network Connections 141
Wi-Fi, a Popular Networking Option 141
The HaLow Effect 142
Li-Fi Versus Wi-Fi 142
Bluetooth 5.0 143
Low on Bandwidth 144
Near Field Communications 144
SigFox 146

Chapter 7: Company Profiles 152
About BCC Research 206
About BCC Research.... 207
BCC Membership 207
BCC Custom Research 207

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