MTConnect – IIOT & Need for Standards

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Summary and Background

During 2013, something amazing happened in the manufacturing technology domain – manufacturing and making things suddenly became interesting to the investors and analysis. For the last two decades, manufacturing was thought of as dying or moving overseas, even though for the most part this wasn't accurate and the negative press became a self fulfilling prophecy – the loss of technical colleges and programs is probably the worst casualty of these rumors.

In 2013 companies started bringing manufacturing back to the US and investing in new technologies. There are some interesting statistics about the retiring of the baby-boomer generation and handing over shops to younger, entrepreneurial types. According to a report by Clifton Larson Allen, 35% of the shops interview will be changing ownership in the next five years[1]. As well, around 40% of business owners are contemplating change of ownership.

This all bodes well for technology, because many of the people who will be leading the future shops have grown up with technology and having a machine with less connectivity than the average washing machine or TV will not make a lot of sense. Therefore we are optimistic about the introduction in manufacturing over the next five years and about the outlook for the American hegemony in manufacturing – especially in high precision and high value.

Consider another interesting trend in the market places as well, the Internet of Things (IOT) or with respect to manufacturing the Industrial Internet of Things (IIOT). The term IOT was first coined at MIT in 1999 to provide a name for the new RFIDs and wireless sensor networks. The interconnection of sensors, devices, and other “things” was differentiated from the classical person to computer communications.

Analysts and market forecasters suddenly realized there were a lot more things than people and things that can produce data will produce a lot of data – orders of magnitude more data than we produce today. This made the communication infrastructure and wireless companies like Cisco and AT&T very interested. So, people are now taking a closer look into this market and one of the most interesting markets to emerge is manufacturing.

In this paper, we’ll discuss how these industry and market trends are building to a revolution in manufacturing and the digital shop and how standards play a key role in enabling this revolution. We’ll also show that this is not practical without standards and talk a little bit about what is possible when we have a fully integrated production process and supply chain.

IIOT, DIM, IOE, and Smart Manufacturing

According to Cisco[2], by 2017 we will have 1.7 billion wireless M2M connections across the supply chain. They also estimate that smart factory technology can create $1.95 trillion in value by 2022 by improving control, agility and flexibility in manufacturing processes. This is not money spent, but money saved by the industry because of more efficient practices – better yet this is a return on investment – which considers the cost of the technology.

Just to take this into perspective, this is a little less than 20x the value created in healthcare with IOT technologies. So with $1.95 trillion dollars on the table, what is needed to realize that savings – money that goes back to shop owners and makers. The Cisco paper and many other papers reflect on some high level concepts of what is needed to make this happen, but they don’t have a roadmap to realize the goal. This is understandable, they are looking at the portion of the revenue that will come from the immense amount of network and sensor technology to drive this revolution, not to be underestimated. So, Cisco and some of the other infrastructure companies are gearing up to supply the physical layer and move the exabytes of data around, what's the next step?

It's All About the Data

We can assume if we have a good use for the data, the infrastructure will be available to get it where it needs to go. Now we need to take the next step up the value chain and turn the raw data into something that can provide insight into a component of the business. This is where the savings are coming from, the the moving of data, but the intelligence the data can enable.

Raw data coming off of sensors and manufacturing equipment, whether it's a machine tool or a fork lift or a paint brush, everything that is used in the manufacturing process is vital to the efficiency of that process. To truly understand what is happening, we need to have as much instrumentation as feasible to understand where effort and time goes and what it takes to produce a product.


  1. Manufacturing and Distribution Outlook - 2013 and Beyond –
  2. Increase the Value and Relevance of Data in Motion - 2013 Cisco white paper.