Opportunities with the Internet of Things (IoT) are enormous, there is no doubt about it. It was during my time living in New York City a few years back, where I was excited the first time by an IoT application.

To explore New York’s tourist sights, there is a mobile app that shows you the live visitor streams in one of the impressive skyscrapers. This allows you to decide the best time for a tour and to enjoy a view from the visitor terrace. The app also allowed registered users to change the colors of the illuminated antenna at night time, which was a great trick to impress any visitors I hosted in the city.

While this use case was certainly a great party trick, it is no comparison to the business value we see when equipping machines, equipment, transport boxes, containers, or devices with Industrial Internet of Things (IIoT) capabilities.

In the past year, manufacturers all over the world experienced significant disruptions that can impact globally optimized supply chains. Running resilient operations — highly productive and interconnected with a network of suppliers, contract manufacturers, logistics service providers, and customers — is key to weathering the storms of disruption.

Resiliency allows companies to withstand disruptions and, more importantly, to drive business process transformations of entire operating models. Thereby, Industry 4.0 technologies, such as IIoT and edge computing, have proven significant enablers. Optimized production, improved decision making based on higher visibility, and supply chain transparency are just a few examples of the many opportunities that IIoT provides.

At SAP, we see even more in it; we see the opportunity for companies to better understand their businesses, redefine business models, and meet new customer demands — all while achieving sustainability goals.

By embedding IIoT capabilities and making industrial data available to line-of-business and industry applications such as SAP S/4HANA and SAP Digital Supply Chain, we enable new business processes, empowering customers to connect entire industry value chains.

Enabling Industry 4.Now with Smart Sensing

To help customers move more swiftly with their transformation strategies in 2021, we recently released “smart sensing” capabilities. The reason? Industry 4.0 requires the digital identification and localization of people, assets, machines, deliveries, and other business objects. Smart sensing technology helps to not just exchange this information between physical objects and enterprise applications, but also to track the associated business objects to automatically steer process steps and actions. Cloud technology enables not only the possibility to process large numbers of scanning events in parallel, but also provides a powerful decision and rules engine to “translate” insights to actions, allowing customers to leverage intelligence at almost every business process they can imagine.

The smart sensing capabilities are offered as part of SAP IoT and enable customers to automatically correlate the movement of physical objects to specific process steps by scanning ID-tags such as RFID, barcode, QR code, or image recognition.

Let’s have a look at a few examples:

1. Smart Sensing Technology in a Logistics Scenario
Think about a manufacturer of high voltage batteries that sends the products out for delivery to an automobile manufacturer. Each movement of a physical item — for example, product, pallet, container, etc. — has an implicit meaning for the progress of the business process execution. Sending a battery out for delivery to a customer means “goods issue,” receiving a delivery means “goods receipt.” By equipping these batteries with RFID tags, a “goods issue” or “goods receipt” can be created automatically in SAP S/4HANA as soon as it passes an RFID gate at the warehouse dock, for example. Based on the scan event, it can be detected if the correct handling units and the correct number of handling units have been shipped. In this way, the battery manufacturer can reduce manual efforts and thereby also avoid human mistakes.

2. Smart Sensing Technology in a Handling-Unit Tracking Scenario:
Being part of one solution, we can now also combine the power of smart sensing tags with sensors for IoT. An example: By equipping the transport boxes of our batteries with IoT sensors, we can now automatically create a digital twin of these handling units based on an ID scan with smart sensing. As a consequence, conditions of the batteries — such as temperature, humidity, or shocks to the unit — are tracked during the transport and warehouse processes in real time. In case an issue occurs with the delivery, the sales or logistics manager will be notified in SAP S/4HANA immediately and receives proposals on how to solve the issue. Such proposals can be to create a customer return, send an express replacement order, or to inform the affected customer about the situation. This increase of supply chain transparency enables the battery manufacturer to react faster and more effectively when issues occur and to ultimately extend the average lifespan of the batteries.

3. Smart Sensing Technology in a Production Scenario:
Another example taken from production is SAP IoT-enabled Kanban. During the production of our high voltage batteries, the manufacturer leverages Kanban, a scheduling system for lean manufacturing to improve manufacturing efficiency and to avoid excess inventory at any point in production. By equipping kanban containers or shelves with RFID tags, status changes — for example, empty, full, in use, etc. — are triggered in SAP S/4HANA. This status update automatically triggers replenishment at the warehouse or at the supplier. The real-time analytics of location and retention time of raw material enables the manufacturer to optimize stock level as well as line runners’ routes.

Extending Smart Sensing Technology to the Edge

In order to provide reliable connectivity among machines, people, processes, and assets, the scenarios described above will soon be extended to the edge. In latency-sensitive scenarios, relevant business data from SAP S/4 HANA business objects is synchronized from cloud to the edge nod such as a gateway in a factory or at a warehouse. Scanning events through auto-ID devices can now be enhanced with relevant business data locally. In this way, configurable business rules and actions can be instantly processed and analyzed at the edge. The consequence for the business is that no pallet, truck, or Kanban box will ever stand still, as even during intermittent Internet connectivity, the show will go on based on the edge compute right at the site.

The physical proximity of applications and devices make it easier to achieve low-latency responses and to optimize bandwidth consumption by sending only relevant data to the cloud. Compounded with various benefits in terms of data privacy and cost savings, it helps ensure business continuity and offline operations even for the most mission-critical processes when connectivity is not available or unstable.

Edge Containerization

Bringing software from the cloud to the edge happens via so called containers. A container consists of an entire runtime environment: an application plus all its dependencies and configuration files needed to run it, bundled into a single package. Containers provide the answer to the question of how software can run reliably when moved from one computing environment (cloud) to another (edge). Such containers may be only a few megabytes in size, which makes them ideal for running on edge devices with limited hardware resources.

Kubernetes is the de-facto standard for container orchestration in the cloud or edge. By embracing Kubernetes at the edge, SAP moves toward a uniform approach in service management across cloud and edge. SAP Edge Services provides a centralized fully fledged edge lifecycle management using Kubernetes for services and applications, including the possibility to deploy extensions, while enabling consistent execution across cloud and edge.

Bring Your Own Data Lake

IIoT and edge computing are critical enablers for connecting industry value chains, running businesses in real time, and driving a step-change in productivity. Yet our vision is to go one step further and empower customers to leverage more data than ever before. “Real world thing-data,” coming from machines, devices, industrial cameras, or sensors by themselves are useless. Only by combining IoT data, such as a detected shock of a sensor, with business data, such as deliveries, materials, or production orders, can we truly generate business value.

Our strategy of “bring your own data lake” will enable customers to integrate data from their own Big Data stores into SAP applications. With this, customers can leverage and integrate different kind of data formats, allowing them to contextualize their “thing” data with application business data to transform from insights and analysis to action.

The potential of IIoT is not just in connecting millions of devices, or the antenna of a skyscraper with users, but to really turn the data they generate into intelligent insights and derive action. As the COVID-19 crisis amplified the need for business and supply chain resilience, IIoT will be embedded into more business processes than ever before — enabling entirely new business models. Through this, businesses can rapidly scale their productivity, product quality, sustainability, and even customer experience goals, leading to happy and engaged end customers.

For more information about IIoT, read:

Dominik Metzger is head of Product Management for Manufacturing and Industrial IoT at SAP.