How Digital, IoT and Interconnection is Driving the 4th Industrial Revolution

Welcome to the new manufacturing supply chain

Digital transformation is having such a dramatic impact on manufacturing today that many experts such as Professor Klaus Schwab, executive chairman of the World Economic Forum, have dubbed this digital era the “fourth industrial revolution.”  The digital manufacturing revolution is being powered by advancements such as smart manufacturing, robotics, artificial intelligence, automation and the Internet of Things (IoT). In fact, the World Economic Forum expects manufacturers to invest $267 billion in the IoT by 2020.

The other investment that manufacturers are making, according to the Global Interconnection Index, a market study published by Equinix, is in private Interconnection among counterparties to create the next generation, global manufacturing supply chain. According to the Index, the manufacturing sector’s consumption of Interconnection Bandwidth capacity is expected to grow 54% per annum to 540 terabits (Tbps) of Interconnection Bandwidth capacity by 2020. At that time, this could represent 11% of the total mix of all vertical markets’ (e.g., banking and insurance, telecommunications, cloud and IT services, etc.) global consumption of installed bandwidth capacity, which is anticipated to total 5,000 Tbps. In this context, Interconnection Bandwidth is defined as the total capacity provisioned to privately and directly exchange traffic with a diverse set of counterparties and providers at distributed IT exchange points.

Customization and servitization is driving a digital supply chain and greater interconnection

The rising demand for smarter, customized products, Products-as-a-Service and “servitization”—the selling of a solution versus a single product—is forcing manufacturers to find new ways to incorporate product and customer data, and automation across the product lifecycle. For example, NikeID, lets customers personalize and design their own custom Nike shoes and Invisalign can manufacture tens of millions of unique customer dental molds from digital images of patients’ teeth. As a result, digital manufacturing technologies are transforming every link in the manufacturing value chain, from the research and development supply chain, to factory operations to marketing, sales and service/remediation.

Some of the ways manufacturers are taking advantage of digital technologies include:

  • Simulating design, testing and assembly manufacturing using virtual and augmented reality before doing anything in the physical world. This is a great way to slash manufacturing time and tweak the manufacturing process and changes quickly and at low cost.
  • Enhancing real-time supply chain visibility, allowing manufacturers to automate manufacturing processes, cut costs and get products to market faster.
  • Harnessing supply chain management, social media, online configurators, flexible production systems and other strategies to meet the increasing demand for mass product customization and personalization.
  • Harnessing 3-D printing to create custom products consisting of a single part, where they used to require three or four parts.
  • Using dispersed IoT sensors and technologies for greater manufacturing efficiency and predictive maintenance that anticipates and addresses potential customer product issues before they occur

However, some of the constraints that manufacturers face integrating these digital technologies into legacy IT infrastructures include:

  • Legacy data systems are unsuited to data accessibility and sharing, creating barriers to real-time collaboration and information exchange
  • Transporting data from dispersed products, consumers and partners to a central repository inhibits real-time analyses that drive insights and preventive maintenance processes
  • Leveraging and integrating mobile, cloud, social media and IoT technologies with legacy IT infrastructures is a complex, expensive undertaking
  • Protecting intellectual property and staying compliant while collaborating and accessing the cloud over the public internet increases risk

In addition, collaborating and harnessing all the data being created from various devices in different formats in real time requires fast interconnections and low latency. This can be made impossible due to more centralized manufacturing architectures with high-latency, long distance networks to remote plants and IoT devices and customer data sources. And, the cost of bandwidth over those WANs for increasing amounts of data traffic can be prohibitive. 

An Interconnection strategy for digital manufacturing

To successfully leverage digital technologies fully, along with other data, analytics and cloud platforms, manufacturing companies need a globally, integrated interconnection framework upon which to collaborate and innovate. For example, latency is an issue that can only be addressed by reducing interconnection distance. The best way to do that by placing manufacturing IT infrastructures and interconnection out at the digital edge, close to the components, IoT sensors, partners and customers that make up the manufacturing supply chain. And given that much of this data is collected and analyzed in the cloud, it is also vital to be close to cloud services, and the networks that enable direct and secure cloud access, as well.

This is where an Interconnection Oriented Architecture (IOA®) strategy can be a game changer for manufacturing companies. IOA is a proven and repeatable architectural framework that both enterprises and service providers leverage to directly and securely connect people, locations, clouds, data and things. IOA integrates the physical and virtual worlds where they meet at the digital edge and shifts the fundamental IT delivery architecture from siloed and centralized to interconnected and distributed.

An IOA framework enables manufacturing companies to:

  • Reconfigure networks with interconnection hubs at the digital edge to accelerate global collaboration within the supply chain
  • Create dedicated, secure interconnections that enable data security and compliance wherever data resides, on-premises or in the cloud
  • Enable distributed, safe, real-time data capture and analytics, close to the source, for instant innovation and insights into operations, products and customers
  • Adopt new digital technologies that can be easily integrated and leveraged enable greater operational and cost efficiencies

Manufacturers can build an IOA framework on Platform Equinix, which offers 190 data centers in 48 global metro markets, as well as direct access to 2,750 cloud and IT service providers and 1,600 networks. Equinix’s manufacturing ecosystem includes more than 200 companies worldwide, including major players such as GE and its Predix Cloud for capturing and analyzing huge volumes of industrial data. Our Equinix Cloud Exchange™ (ECX) Fabric also enables manufacturing business to rapidly scale their operations across the largest markets globally, by connecting to more business partners and locations. In addition, it provides access to cloud service providers within or across metros for geo-redundant or integrated multicloud and hybrid cloud architectures.

To find out more about how an IOA strategy can accelerate your digital manufacturing transformation, check out our Manufacturing Industry Solution Brief. And, take a look at the Global Interconnection Index for some eye-opening predictions on the growth in the consumption of interconnection bandwidth across multiple global regions and industries.

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