IoT in Manufacturing: Applications and Benefits Explained

IoT is no longer a futuristic concept in manufacturing—it’s the driving force behind smarter, more efficient operations.

What began in 1968 as a simple tool for monitoring machine performance has evolved into a sophisticated network of interconnected devices that enable real-time decision-making and automation.

From minimizing downtime to optimizing production workflows, IoT in manufacturing delivers tangible benefits that significantly enhance efficiency and profitability.

According to a GE report, 58% of manufacturers affirm that IoT is crucial for their digital transformation, signaling a shift towards a future where connected devices and data analytics are essential to staying competitive.

The potential for manufacturing IoT solutions is vast, and we’re only beginning to scratch the surface. As more industries embrace this transformative technology, the opportunities for innovation, cost savings, and operational improvements are limitless, bringing in a new manufacturing era.

This detailed blog explores the many ways IoT is reshaping the industry.

Why is IoT Gaining Traction in 2025 and Beyond?

IoT solutions for manufacturing are already transforming the industry by streamlining scheduling, enabling predictive maintenance, and collecting valuable data. As we enter 2025 and beyond, we can expect organizations to elevate their operations further, leveraging IoT for even greater efficiency, automation, and data-driven decision-making.

The IoT in the manufacturing market is expected to reach $87.9 billion by 2026, which points out the immense potential and growing reliance on IoT technologies to revolutionize production processes, optimize resource utilization, and enhance overall competitiveness in the manufacturing sector.

If you ask, what makes IoT so special? Here’s the answer.

Three major technologies empower IoT –

1. 5G
2. Artificial Intelligence (AI)
3. Big Data 

There is hardly a segment that runs without the above technologies. Be it agriculture, smart city, robotics, healthcare, retail, or home automation. IoT is a broad use case covering everything from using public cameras to monitor social distancing to using telemedicine and remote healthcare.

Also Read: How IoT in Healthcare is Revolutionizing the Medical Industry

The IoT in the manufacturing industry, often called IIoT (Industrial Internet of Things), has vast implications for operations. This covers how we manufacture goods, sell them to customers, and follow up with support. Integrating IoT infrastructure and robotics within manufacturing processes is paving the way for companies to leverage IoT in ushering in the era of Industry 5.0.

This evolution highlights IIoT as a pivotal driving force, marking the significant leap from Industry 4.0 to embracing Industry 5.0 in manufacturing. This brings us to our next point of discussion.

The Role and Examples of IIoT in Manufacturing

Before you confuse IoT (Internet of Things) with IIoT (Industrial Internet of Things), here’s a clarification:

IIoT (Industrial Internet of Things) is a subcategory of IoT (Internet of Things) used in an industrial context. It’s a unique phenomenon where various digital tools connect data and machines in “smart factories” for productivity and quality.

Therefore, IoT is a consumer-centric concept, whereas IIoT focuses more on supply chain, manufacturing, and management.

Coming back to the Industrial Internet of Things (IIoT), it is revolutionizing manufacturing by connecting machines, sensors, and devices to gather and analyze real-time data. This technology enhances operational efficiency, minimizes downtime, monitors equipment and production processes continuously, and supports predictive maintenance.

IIoT helps streamline workflows, improve product quality, and enable data-driven decision-making. By automating tasks, monitoring in real-time, and providing actionable insights, IIoT reduces costs, boosts safety, and allows manufacturers to respond more effectively to market demands while improving overall performance.

Here are some of the top examples of IIoT in manufacturing:

• Predictive Maintenance: Sensors track machine health indicators like vibration and temperature to predict potential failures and schedule maintenance before breakdowns occur.
• Supply Chain Management: RFID and GPS tracking systems provide real-time visibility into inventory and shipments, improving stock management and delivery timelines.
• Automated Production Lines: IIoT sensors and robotics adjust production parameters automatically, increasing speed and precision while reducing human error.
• Worker Safety: Wearable devices track workers’ health metrics and environmental conditions, providing alerts for potential safety hazards or health risks.
• Asset Management: IIoT systems monitor the location and condition of assets, helping manufacturers manage equipment, optimize usage, and schedule timely maintenance.
• Quality Assurance: Real-time sensor data ensures that products meet quality standards, allowing immediate adjustments to address defects or inconsistencies.

Benefits of IoT in Manufacturing and Related Industries

Now that we know how IoT technologies are game-changers for manufacturers, let’s see how this actionable data benefits manufacturers and related industries. The organizations can break open the given data silo and access information at any level. This way, engineers, operators, and supervisors can easily gain visibility into production. They can take cues from the machine data and improve efficiency on the production floor by leveraging IoT devices for manufacturing.

Moreover, businesses can make more informed decisions backed up by data. So, overall, personnel at all levels can detect problems and optimize operations using the Internet of Things in manufacturing.

You also get the following benefits from IoT.

Asset Tracking

You can track products throughout the supply chain and notify the stakeholders of caution and possible damage to the goods.

Also Read: Smart Railways – How IoT is Transforming Train Travel and Operations

Facility Management

IoT-connected sensors and tools can examine humidity, temperature, and vibrations. They can easily detect conditions that negatively affect operations and alert you beforehand.

Enhanced Machine Utilization

The Industrial Internet of Things enables machines to connect to the internet, giving you insight into machine lifelines and KPIs. This data is a massive help in fixing the causes of unplanned downtime.

Predictive Maintenance

Real-time data from interconnected IoT devices help predict defects in tools and machinery. This again saves you downtime and helps increase overall productivity.

Not to forget the associated cost you save by reducing process time, scrap, and rework.

Connecting Remote Assets

Connecting tools and devices means data from various remote assets are easily accessible from one central location. These assets can be examined and monitored, giving you more control.

Process and Behavior Monitoring

In business organizations and enterprises, managers can gain insight into their employees’ performance using IoT data. For instance, one can identify that employees consistently produce defections due to this step and perform a root cause analysis. This translates to quality assurance, cost-saving, and enhanced scalability.

Also Read:  IoT In Logistics And Supply Chain – Benefits, Use Cases & Challenges

Key Components of IoT in Manufacturing Industry

Now that we’ve covered the benefits of IoT in manufacturing, let’s dive into how it works. It connects smart devices, data communication networks, software, analytics, and the people who drive operations. Together, these components generate actionable insights that optimize manufacturing processes. Here’s a closer look at each of these critical elements.

Smart Assets

These smart or intelligent assets contain interconnected devices, security components, application software, controllers, etc. These modern assets have communication capacity with local intelligence, and they support analytics with connectivity and provide you with information for the value chain.

Examples of intelligent assets in IoT:

• Digital equipment
• Plants instrumentation
• Edge devices
• Embedded systems

Data Communication Infrastructure

The smart assets in the IoT system need other technologies and the internet to establish communication. Industrial IoT systems are now deployed on cloud infrastructures like Amazon Web Services. These infrastructures store, manage, and process data using remote servers.

Software and Analytics

IoT software analyzes the data collected by the devices and systems. It also gives you an interface to interact with other systems.

Cloud-based software provides unlimited limited benefits to manufacturers over on-premise software. This gives greater speed, flexibility, and reliability. Read how IoT helps manufacturers better their operational efficiencies.

People

This one is an important and, unfortunately, the most overlooked component of IoT. People interact with the system by making decisions based on data and analysis. The better the data, the better the decisions. Hence, a quantified balance is maintained in the organization with the interaction between people and other IoT components.

Related article: Demystifying IIoT – 10 Applications and Use Cases across Industries

IoT Applications in Manufacturing With Real-Time Examples

You are all set to implement IoT in manufacturing with the above components. The use cases of IoT are ever-expanding; this being said, below are some of the real-time IoT use cases in manufacturing you can relate to.

Supply Chain Optimization

Optimized supply chain management is one of the most notable examples of the Internet of Things in manufacturing. IoT aids in tracking inventory levels, monitoring logistics, and streamlining the entire supply chain process.

Real-Life Example: Caterpillar

Caterpillar uses IoT to track machinery parts and equipment in real-time, optimizing supply chain operations to ensure timely deliveries and reduce inventory costs.

Energy Management

The Internet of Things smart manufacturing systems monitor and optimize energy usage across manufacturing facilities, identifying areas of excess consumption and implementing energy-saving measures to reduce overall operational costs.

Real-Life Example: Johnson Controls

Johnson Controls integrates IoT sensors into its manufacturing facilities to monitor energy consumption, helping reduce energy waste and improve efficiency across its global operations.

Machine Monitoring to Track OPE/OEE

You can track Overall Process Effectiveness (OPE) and Overall Equipment Efficiency (OEE) through collected data on machine uptime. This allows you to gain visibility and monitor state data. This can be done using sensors connected to IoT gateways.

Real-Life Example: Siemens

Siemens uses its Smart Condition Monitoring System with IIoT sensors and AI to predict equipment failures (e.g., pumps, compressors) before they happen, enabling predictive maintenance and improving OEE by reducing unplanned downtime.

Inline Quality Assurance

One prominent example of IoT in manufacturing is the inline quality assurance technique. You can also use smart assets such as scales, calipers, and machine vision cameras at quality check departments. Intelligent sensors give a more accurate precision than any manual inspection device. Even better, you can install quality checkpoints throughout production to catch defects early.

Real-Life Example: BMW

BMW uses IoT-enabled smart cameras and sensors on the production line to inspect parts in real-time, ensuring high-quality standards and reducing defects during manufacturing.

Poka-Yoke

Poka-Yoke is a popular manufacturing technique that means “mistake-proofing.” For instance, IoT scales can detect a product’s weight. If it’s out of specification, it signals a mistake.

Real-Life Example: Toyota

Toyota applies IoT-based systems in its assembly lines to implement Poka-Yoke, using sensors to detect errors (like incorrect weight) and automatically stopping the line to prevent defects.

If this makes you interested in implementing IoT in your next project, you can check out how to make your IoT project successful for better insights.

How to Implement IoT in Manufacturing: A Step-by-Step Approach

Implementing IoT in manufacturing requires a strategic approach, starting with clear objectives and careful planning to ensure seamless integration across systems. Here are some top steps for implementing IoT in your existing manufacturing systems.

Understand Your Manufacturing Business Needs

Start by evaluating your business needs and determining how IoT can address challenges such as improving operational efficiency, minimizing downtime, or enhancing product quality. Defining clear, measurable goals from the outset helps ensure that IoT implementation aligns with your strategic vision. This step also helps prioritize areas where IoT can deliver the most immediate value.

Select the Right IoT Devices and Sensors

Choose IoT devices and sensors that best suit your manufacturing processes and capture the essential data for your objectives. This may include temperature, pressure, vibration sensors, and smart meters. Ensure these devices are compatible with your existing infrastructure, and plan for future scalability as your operations grow or evolve.

Establish a Robust Network Infrastructure

A reliable network backbone is crucial for the success of IoT in manufacturing. Set up a strong, secure communication network capable of handling the constant flow of data generated by IoT devices. Depending on your needs, consider upgrading your Wi-Fi or Ethernet or implementing edge computing to enable real-time processing. Your network must be both resilient and redundant, minimizing the risk of disruptions during critical production periods.

Integrate IoT with Existing Systems for Seamless Operations

IoT devices must seamlessly integrate with your current systems, such as Enterprise Resource Planning (ERP) and Manufacturing Execution Systems (MES), to enable smooth data flow and enhanced decision-making. Integration helps streamline operations, reducing manual interventions and data discrepancies. This step ensures that IoT data is actionable and easily accessible for the team.

Run a Pilot Program to Test the Feasibility

Before fully rolling out your IoT system, conduct a pilot project to test its functionality and performance on a smaller scale. During this phase, closely monitor the system’s integration, gather employee feedback, and address any challenges or issues. A successful pilot provides valuable insights and helps mitigate risks before a full-scale implementation.

Scale the Solution and Continuously Optimize

Once the pilot has been successfully validated, scale your IoT solution across all relevant production areas. Keep a close eye on performance data and make ongoing adjustments to refine and improve processes. As your manufacturing operations expand, ensure that your IoT solution remains adaptable to changing demands and continues to drive efficiency improvements at scale.

Challenges of IoT Adoption in Manufacturing and Solutions to Overcome Those

So far, we have discussed all the good the Internet of Things brings to your business. It’s time we also got familiar with some of the challenges it brings. Let’s take a brief look at the challenges of IoT manufacturing and how to tackle them.

Data Security/ Privacy Issues

Major IoT adopters believe the concept is increasing the risk of cyberattacks. As IoT systems have become more commonplace, Forbes says, each IoT device represents an attack surface that can be an avenue into your data for hackers.  If you want to know more about maintaining security in the IoT era, read how to ensure cybersecurity in the age of IoT.

To mitigate the risk of cyberattacks, manufacturers must implement robust cybersecurity measures, including encryption, secure communication protocols, and regular software updates.

Uncertainty in ROI

IoT asks for several investments like hardware expenses (sensors, gateways), cloud storage expenses, cost of connectivity administrative labor, etc. Businesses and industries have to consider quick solutions to generate a good ROI.

To ensure a positive ROI, businesses should start with small-scale IoT projects, measure performance improvements, and gradually scale as they demonstrate tangible benefits.

Lack of Qualified System

Prominent industry experts state that most of their employees are unfamiliar with IoT usage. A few similar surveys say that the system lacks specific skills such as embedded data, electronics, Big Data, and IoT security.

Investing in employee training and partnering with IoT solution providers can help bridge the skills gap and ensure the successful adoption of IoT technologies in manufacturing.

Current Trends and Future Projections of IoT in Manufacturing

IoT is undoubtedly a game-changer for the manufacturing sector, driving a new era of efficiency, connectivity, and innovation. As the industry continues to evolve, here are some of the most exciting developments or the latest IoT for manufacturing trends to keep an eye on:

5G Connectivity for Faster Data Transfer

The rollout of 5G technology will significantly enhance the speed and reliability of data transfer between factory IoT devices. With ultra-fast, low-latency connections, real-time data can be transmitted more efficiently, enabling quicker decision-making and improving overall operational responsiveness.

This will also facilitate deploying more advanced IoT applications, like remote-controlled machinery and real-time collaboration between distributed teams.

Blockchain for IoT Security

As IoT networks expand, security becomes a priority. Blockchain technology can be integrated with IoT to secure data exchanges between devices. Manufacturers can ensure that IoT data is secure, transparent, and reliable by using decentralized, tamper-proof records, reducing the risk of cyberattacks and fraud.

This technology will provide a robust, traceable audit trail of data transactions, ensuring that any alterations or breaches in the IoT system can be detected and addressed quickly.

Digital Twins for Optimizing Manufacturing Operations

Digital twins, virtual replicas of physical assets or entire production lines, will become more common in manufacturing. These virtual models, powered by IoT data, allow manufacturers to simulate, monitor, and optimize operations in a digital space.

These models help predict problems and improve efficiency and can also be used to train and test new strategies without disrupting production.

Edge Computing for Faster Data Processing

Edge computing will allow IoT devices to process data locally, right where it’s generated, rather than sending it to the cloud. This reduces delays and the need for constant data transfers, enabling quicker responses and more real-time adjustments to manufacturing processes.

By analyzing data on-site, operators can immediately address issues, making the entire system more responsive and efficient.

Autonomous Factories for Smarter Manufacturing Operations

The future of manufacturing may involve fully autonomous factories, where IoT devices, robots, and AI collaborate to manage everything from production schedules to equipment maintenance with minimal human input.

These self-sustaining factories will continuously optimize operations, improving efficiency while reducing the potential for human error. Such automation will allow factories to adapt to changing demands quickly, reconfiguring production lines with ease and flexibility without manual intervention.

Also Read: Autonomous Agents in Business

Robotics and Cobots for Enhanced Workforce Collaboration

Robotic Process Automation has been used in manufacturing for decades, but collaborative robots (cobots) are the next evolution. These IoT-connected robots work alongside human workers, sharing tasks and assisting in production without safety barriers.

Cobots can adjust to different workflows, learn from human operators, and respond to changes in real-time. IoT sensors on cobots allow them to communicate with other machines on the floor, optimize workflows, and reduce the risk of human error.

Transform Your Manufacturing Efficiency with Appinventiv’s IoT Solutions

To summarize, the Internet of Things in manufacturing and businesses helps maximize productivity, reduce cost, and eliminate waste. By leveraging IoT technologies and data, you better understand demand forecasting and supply chain processes that ultimately result in a better customer experience. Hence, it’s never too late to seek IoT software development services for your business.

Appinventiv, as a trusted provider of IT solutions for manufacturing, can help you with IoT consultancy, IoT app development, wearable connectivity development, testing, and maintenance services.

As a part of our recent manufacturing process, we partnered with a global manufacturer to enhance their supply chain visibility by implementing a data analytics solution. This transformation led to a 60% improvement in supply chain transparency, allowing them to track and manage operations better.

Additionally, they achieved a 40% reduction in transportation and logistics costs while also boosting operational efficiency by 30%.

With advanced and proficient skills, we have contributed to scaling many businesses similar to this and helped them boost productivity and scalability.

Have a similar project idea in mind?

Let’s see what we can do for you. Connect with us!

FAQs

Q. How is IoT used in manufacturing?

A. There are various uses of IoT for manufacturing; for instance:

• IoT solutions for manufacturing enable continuous tracking of production processes and machinery, allowing for immediate detection of issues.
• The technology streamlines production lines by automating tasks, increasing efficiency and consistency.
• IoT uses data analytics to predict equipment failures before they occur. It helps improve equipment lifespan and reduce downtime.
• One of the most remarkable uses of IoT in manufacturing is optimized supply chain management, which improves inventory tracking, demand forecasting, and logistics.
• IoT in the manufacturing industry enhances operational efficiency and reduces operational costs through better resource management.

Q. What problems does IoT solve in manufacturing?

A. IoT in the manufacturing industry solves various problems on the factory floor and addresses challenges, including:

• Equipment downtime
• Energy inefficiency
• Lack of visibility in production processes
• Lack of qualified system
• Data security and privacy issues

Q. How can IoT devices minimize downtime in a manufacturing plant?

A. IoT devices help minimize downtime by constantly monitoring machinery and equipment for any signs of malfunction. Sensors track key performance indicators, and when irregularities are detected, they trigger real-time alerts.

This allows maintenance teams to address issues before they cause significant disruptions. By facilitating early intervention and enabling automated responses, IoT ensures that production processes remain efficient and downtime is minimal.

Q. How can the IoT improve predictive maintenance in manufacturing?

A. IoT enhances predictive maintenance by collecting real-time data from machinery sensors, such as temperature and vibration levels. Advanced algorithms analyze this data to predict failures before they occur, enabling manufacturers to schedule maintenance only when needed. This helps prevent breakdowns, reduce costs, and improve equipment reliability, ultimately extending the lifespan of critical assets.