It seems like just the other day when the buzz in supply chains was all about wondering when RFID chips would be cheap enough—under a nickel each—for it to make sense to build elaborate supply chain tracking systems using radio frequency identification readers and chips in an extended Internet-connected network across many points of production and shipment.
Now the excitement is about how computer chips can be placed virtually anywhere in an Internet of Things deployment that allows one machine to communicate with other machines or software applications via the web. But while RFID advanced slowly, IoT is already happening in practical applications designed to improve efficiency and generate revenue.
Hans Thalbauer, senior vice president for extended supply chain and Internet of Things applications at business software company SAP SE, notes that companies are finding ways with the help of IoT to provide a new level of value to customers. Kaeser Kompressoren SE, a Germany-based manufacturer of air compressors, for example, has developed a new business model under which it now will give an industrial air compressor to a business customer—but only charge the customer for when it actually uses the compressor. With IoT sensors embedded in its machines, Kaeser can monitor when a compressor, or any part of it, needs service and send a technician with the exact replacement parts needed to keep it running at peak performance.
Knowing when to service a machine before something breaks, Thalbauer says, is a key way to keep machines running and revenue flowing. And companies are learning to use IoT to monitor multiple sources of information—such as the level of vibration of a machine and nearby weather patterns—and apply algorithms to that data to predict when a machine to break down. An alert is then sent via the internet to order a replacement part and service.
“This is just one example,” Thalbauer says. “We see possibilities in connecting things throughout the world.”