How to tackle inflation with IIoT
- 07/02/2024
Inflation hit hard in recent months and years. How do you deal with this as a manufacturing company? And can digital technology and IIoT help you?
2022 was a tough year for the manufacturing companies. Inflation reached absolute record levels in Europe and the United States in early 2022. The aftermath of the COVID pandemic, the conflict in Ukraine, the tightness of the labor market, and the energy transition that is taking place by fits and starts; it all contributes to an inflationary climate. In fact, analysts expect the next decade to be one of low growth and volatile inflation.
Inflation affects companies in all sectors, but for manufacturing companies, things are often even more complex. High labor costs, rising energy prices, and a fragile supply chain drive inflation, and these are all factors that can't just be warded off with the snap of a finger.
What can manufacturing companies do in the face of inflation?
Companies' reactions to rising inflation can vary. For example, raising prices to compensate for rising production costs is obviously an option, even though there is a limit to how far the customer can go along with it.
However, the classic recipe book in the fight against inflation lists two other strategies.
- Cutting costs: This can range from seeking cheaper suppliers to reducing the cost of production. The challenge here is not to let cost reduction come at the expense of production quality.
- Increase productivity: Doing more with less, it is the holy grail of many manufacturing companies, and it is a way to mitigate the effects of inflation. Again, working faster should not get in the way of production quality.
Cutting costs and increasing productivity, it seems easier said than done. But technology can lend a serious hand for these two challenges.
By technology, we are referring primarily to Industrial Internet of Things (IIoT). Today, manufacturing companies are increasingly discovering the potential of this technology. By connecting their machines, people and processes and collecting data from them, manufacturing companies can work more efficiently, reduce costs, increase capacity or improve product quality.
Reduce costs with IIoT
IIoT will obviously not solve inflation. What it can do is significantly reduce the impact of inflation. How does that work concretely? Here are some possibilities.
IIoT can be used to monitor energy consumption in real time, detect energy waste or optimize energy use.
IIoT sensors can be used to monitor machines and predict when maintenance is needed. This can help prevent costly, unplanned downtime and reduce maintenance costs.
IIoT sensors can be used to monitor production quality in real time, detect defects and reduce waste.
With IIoT sensors, you can monitor the efficiency of machines. That gives you valuable data that you can use to optimize your processes and reduce costs.
Crisis resistant because of IIoT
Manufacturing companies are currently facing a volatile economy. Where inflation is headed in the next few years is anyone's guess for the time being. That is why it is so important for our companies to build in a certain degree of crisis resistance. Implementing IIoT technology in your machinery or production equipment can be an important component in this. Because no matter how volatile the market or inflation is, the production yields that IIoT can create continue to have their value.
IIoT can optimize production processes, increase efficiency and reduce costs. There is no question about that. Still, it is important to note that IIoT - and digitalization by extension - does not come for free. Digital technology remains an investment, and it is important to carefully consider the costs and benefits upfront.
Get usable results with IIoT after 90 days
Yet getting started with IIoT doesn't have to be insurmountably expensive. With 9altitudes' 9A Connected Factory & Insights platform, you can quickly gain insight into your production lines and move on to concrete results, an advantage that many larger IIoT packages lack.
You can then use your new insights to make optimizations, such as reducing machine downtime, improving product quality, or reducing energy consumption or waste. With 9A Connected Factory & Insights, you can gain the first insights after just 90 days. So you'll get ROI from your IIoT project faster.
Interested in a demo of 9A Connected Factory & Insights? Let us know.