Rockwell Helping Manufacturers (Slowly) Join the Internet of Things

Just as connected devices are slowly but surely making their way into our homes, the Internet of Things is also starting to impact the manufacturing industry.

The going is slow: Less than 14 percent of U.S. manufacturers have linked up their factory machines with their enterprise software, says Keith Nosbusch, CEO of Milwaukee-based Rockwell Automation (NYSE: ROK). But the manufacturing sector—from automakers to consumer packaged goods businesses to mining companies—might be close to realizing the vision of what Nosbusch calls the “connected enterprise.”

“We believe industrial operations will change more dramatically in the next 10 years than they have in the past 50,” Nosbusch said Monday, speaking to business leaders at a Greater Milwaukee Committee luncheon. His multibillion-dollar company makes sensors, controls, and other physical products to help manufacturers automate operations, as well as software to help run equipment, troubleshoot problems, and collect and analyze data.

The idea of the connected enterprise is to meld a manufacturer’s industrial equipment with its IT operations—think software that tracks and manages floor operations, human resources, quality assurance, shipping, and more. Tighter integration of hardware and software will not only make it easier for manufacturers to collect data about their operations, but also put that information into the proper context, Nosbusch said. The benefits could include more efficient floor operations with less machine down time, lower capital costs, faster introduction of products to the market—and ultimately a healthier bottom line.

“We believe the connected enterprise is transformational,” Nosbusch said. Still, “true convergence between these two worlds remains a challenge,” he added.

But that’s something Rockwell and other giants, like General Electric (NYSE: GE), have been trying to address in recent years with new software offerings for manufacturing customers. Rockwell has done this through both in-house product development—the company averages 200 patents per year in the U.S., Nosbusch said—and with the help of other companies.

Some examples include Rockwell’s partnership with Cisco (NASDAQ: CSCO); its 2013 acquisition of vMonitor, a Middle Eastern company that makes software-enabled monitoring products for the oil and gas industry; and its $3 million investment in 2013 in Bedford, MA-based SmartCloud, which uses real-time data processing and artificial intelligence to help run connected devices for industrial customers. Within the last year, Rockwell also rolled out a mobile application to help factory managers monitor and troubleshoot equipment from their smartphones and tablets.

The software side of Rockwell’s business is becoming increasingly important to the 111-year-old company’s bottom line—it made up 43 percent of Rockwell’s $6.6 billion in sales last fiscal year, Nosbusch said.

“It’s popular now to talk about disruption,” Nosbusch said. “If you’re not looking at ways you can change and disrupt yourself, others will.”

As manufacturing operations continue getting “smarter” and more connected, Milwaukee could help lead the way. In addition to big, established companies like Rockwell, local startups are also trying to impact the industrial Internet of Things. A recent example is Improovment, a team born at last weekend’s Launch Milwaukee hackathon. Co-founders Chris Welker and Mike Cymerman proposed using Milwaukee-based Scanalytics’ smart floor sensors to track the movement of factory workers and create heat maps that could help manufacturers optimize their operations.

More examples could crop up in the coming years if a local economic development group, which includes Rockwell leaders, successfully bids for a smart manufacturing research institute proposed by the Obama administration. The initiative would be part of a growing National Network for Manufacturing Innovation that currently includes research hubs in Detroit, Raleigh, NC, and three other cities. If Milwaukee is chosen for the smart manufacturing institute, it would likely involve companies like Rockwell, local universities, and state and federal agencies, the Milwaukee Journal Sentinel reported.

Jeff Engel is a senior editor at Xconomy. Email: jengel@xconomy.com Follow @JeffEngelXcon

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