Manufacturing is undergoing so much digital transformation that analysts have dubbed this era Industry 4.0, with 5.0 not far behind. According to a PwC survey, Industry 4.0 drivers include the digitization of both vertical and horizontal value chains and service and product offerings, as well as the development of new digital business models and customer access platforms. [i] Contributing technologies encompass mobile devices, Internet of Things (IoT) platforms (e.g., the Industrial Internet), cloud computing, big data analytics and advanced human machine interfaces.
These emerging technologies are revolutionizing the manufacturing industry with several applications that benefit from Interconnection – the direct and private traffic exchange between key business partners – for high performance and low latency.
Value/Supply Chain Visibility: Manufacturers have long suffered with inefficient paper-based supply chain and inventory processes, but that’s all changing as they move toward data integration and transparency up and down the supply and value chains. Analytics that incorporate external government, weather and holiday information, in addition to value chain data, can help everyone optimize product, pricing and inventory decisions; customize products more intelligently; and get products to market faster, especially during seasonal peaks. Cloud analytics and customer purchase and preference data enhance the process. Interconnection at the digital edge, close to customers, partners and suppliers, enables real-time performance and latency across all these links. The second annual Global Interconnection Index (the GXI), a market study published by Equinix, predicts that Interconnection Bandwidth with supply chain partners will grow from 40 Tbps total capacity to 158 Tbps based on a 41% CAGR between 2017 and 2021 across all industries.
Predictive Maintenance: Analytics based on data collection from Industrial Internet of Things (IIoT) sensors, distributed across manufacturing components and end products, enable manufacturers to predict and address maintenance and repair issues before they negatively impact the manufacturing process and end-user experience. These IIoT solutions slash the number of component and product failure incidences and provide valuable information for future product optimization.
The considerable volume of data that is increasingly streaming out of dispersed sensors must be collected and analyzed in near real time for predictive maintenance to work. For example, an aerospace manufacturer collects large volumes of data from its connected aircraft platform every time planes land and take off at airports across the globe.[ii] It uses cloud-based artificial intelligence, machine learning and data analytics for predictive aircraft component maintenance – a perfect use case for near real-time analytics via Interconnection at the digital edge.
Servitization: This is a rapidly emerging manufacturing trend, in which the manufactured product and customer data become a platform for delivering one or more integrated user services across the product life cycle, which sometimes end up being more profitable than the product itself. These can include everything from recipes incorporating a food product to preventive maintenance contracts that leverage IoT and global product maintenance and usage data. Xerox’s document management services, which are sold with its printers and copiers, represent a good example of servitization. Servitization often requires harnessing IoT, customer and other data to understand how products are used and what services customers crave. Product design often incorporates predictive maintenance data as well as user feedback generated in social media and other manufacturer/user collaboration channels.
Manufacturing Interconnection examples
Orion Engineered Carbons (OEC), a global manufacturer of carbon black products (e.g., coatings, printing inks, polymers and rubber) in 80 countries, runs 14 production plants around the world, with operational headquarters in Frankfurt, Germany. The company consolidated its IT systems into three Equinix International Business Exchange™ (IBX®) data centers in Germany, Hong Kong and the U.S. By leveraging Interconnection Oriented Architecture™ (IOA™) best practices on Platform Equinix®, OEC shifted its centralized IT infrastructure to the digital edge, proximate to cloud providers, to create a high-performance and scalable hybrid cloud infrastructure with built-in application and data redundancy between on-premises and cloud environments. OEC also removed the complexity from its network and reduced its total cost of ownership by approximately 50%. OEC can now move more workloads to the cloud by leveraging optimized high-bandwidth, low-latency connections, while at the same time reducing the risk of service disruption and maintaining compliance regulations through greater data protection and security.
Similarly, a leading Asian electronics manufacturer leveraged IOA best practices by harnessing ECX Fabric on Platform Equinix to build a hybrid cloud infrastructure that enables faster innovation and software development in the public cloud. ECX Fabric, with its fast virtual connection provisioning to networks and cloud providers, allowed the company to quickly move applications to a private cloud once they’ve reached a scalability threshold. The result was an improved customer experience, thanks to high-bandwidth, low-latency Interconnection that enables the best of both worlds – the agility of the public cloud and cost savings and control of the private cloud.
Interconnection is ready to take off
All these trends and use cases benefit from strategically placed metro-based Interconnection control points at the digital edge, close to customers, supply chain partners, IoT deployments and other data sources, to achieve the low latency and security that enable these applications and services to work. Direct data exchange becomes possible when cloud services and supply chain partners are colocated at these control points that can be interconnected with other control points in vendor-neutral colocation data centers in strategic metro locations.
These trends help explain why the GXI predicts dramatic Interconnection growth in the Manufacturing sector by 2021. The GXI estimates that installed Interconnection Bandwidth capacity across all markets could reach 8,200+ Tbps, a fivefold increase over five years. Interconnection Bandwidth is the total capacity provisioned to privately and directly exchange traffic with a diverse set of counterparties and providers at distributed IT exchange points inside carrier-neutral colocation centers.
Among individual market sectors, Manufacturing is predicted to come in fourth in global Interconnection Bandwidth growth, with 975 Tbps global capacity by 2021, thanks to a healthy 2017-2021 CAGR of 56%. It is estimated that by 2021, Manufacturing will consume 12% of all Interconnection Bandwidth capacity globally across all market sectors, according to the GXI.
The U.S. is projected to lead in Manufacturing Interconnection Bandwidth, totaling 490 Tbps by 2021, based on a 55% CAGR, followed by the Asia-Pacific region, with regional Manufacturing giants such as China, at 321 Tbps with a 54% CAGR. The forecast for Europe is 103 Tbps in 2021, with a 61% CAGR, followed by Latin America with 61 Tbps Manufacturing Interconnection capacity and a 62% CAGR.
Download the Global Interconnection Index Volume 2 for more information on Interconnection Bandwidth growth trends by region, vertical markets and ecosystems.
You may also want to check out the IOA Knowledge Base for real-world Interconnection best practices for Manufacturing firms.