Tuesday 4th August 2020

IoT in practice Part I – No breakdowns save Rio Tinto $2mn daily

Published on June 26th, 2018

Maciej Kranz, VP, Strategic Innovation, Cisco Systems, is an acclaimed, pioneering author and speaker about building IoT as an integral part of successful business. Here, in the first of a two-part interview, he talks to Annie Turner about aspects specific to transport.

Annie Turner : You outline many general principles for IoT in your book and say that the winners will “use open standards, open collaboration, open communications, and open, flexible business models and you’re willing to assemble a comprehensive partner ecosystem to build and deploy agile, flexible business solutions”. Is there anything you’d add that is specific to connected cars, or transport and logistics?

Maciej Kranz : The principles in my Building the Internet of Things – a Project Workbook apply broadly to most industries deploying IoT, whether it’s manufacturing, supply chain, or healthcare. Autonomous vehicles or connected cars, however, do present extra layers of complexity because of the convergence of so many technologies and communication systems, which in turn generate, transmit, and receive huge amounts of data. Level 3 or 4 autonomous vehicles, for example, are packed with navigational sensors, cameras, radar, LiDAR, and inertial systems, creating an estimated 2-4 petabytes of data a year.

This calls for an end-to-end architectural approach from the edge of the sensor to the cloud data base, or what we call fog computing (distributed cloud). Fog nodes inside the vehicle process and integrate all this data instantaneously, making it possible to respond in real time to the movements of nearby cars and pedestrians, or to stop safely on an icy road.

Distributed and increasingly cost-effective AI engines connected via high-speed, deterministic networks inside and outside the vehicle can make decisions based on the massive amounts of high-integrity streaming data, made immutable by blockchain and processed by fog nodes. As a result, the vehicle can quickly, dynamically and safely navigate the roads with little to no human assistance. All this must be governed by a comprehensive policy framework.

AT : Did you learn a lot from writing the Project Workbook – setting out the steps companies need to take to ensure success?

MK : I wrote the workbook as a sequel or companion piece to Building the Internet of Things to provide what I believe is the first step-by-step guide on best practices around planning, implementing and evaluating an IoT project. A number of people told me the industry needed such a practical guidebook, and I thought it would take about two months to complete: it took nearly a year. That’s because of so much insightful input I received along the way, such as adding an ROI calculator both in the book and on my web site, which we’re making even more sophisticated.

Annie Turner

Feedback also convinced me to include a readiness scorecard for practitioners to calculate their organisation’s level of preparedness in such areas as infrastructure, technology, security, culture, and skill sets. Many of the steps may seem obvious, such as developing a value proposition or building a partner ecosystem, but I learned that getting back to basics is especially relevant even when addressing the complexity of IoT implementations.

AT : How profound an effect do you think IoT will have on fleet management & logistics? How much progress have we made or are we still at the starting gate?

MK : One of the first practical applications of autonomous vehicles was around truck fleets. Today, there is a plethora of exciting examples where IoT has already been used to dramatically improve fleet management, logistics, and the supply chain, but I think the most profound impacts are yet to come with the further integration of AI, fog computing, and blockchain.

Consider, for example, the global mining company, Rio Tinto, which owns the largest fleet of giant autonomous trucks in the world. The trucks work in huge, open-pit mines that are miles away from the nearest place the trucks can be serviced if they break down or need repairs. In fact, just getting a damaged truck out of the pit requires another, equally costly truck; and the longer the truck is out of service waiting to be fixed, the more expensive the problem becomes for Rio Tinto.

By using IoT sensors to monitor the condition of its trucks, the company has enabled preventive maintenance to address issues before they become major problems. Rio Tinto now saves up to $2 million (€1.71 million) per day every time it avoids a breakdown. There are myriad other examples of benefits in a variety fleets, but it’s clear that more value is on the way when advances in these connected technologies deliver more actionable intelligence, whether it’s around connected or remote operations, preventive maintenance, predictive analytics, or preventive maintenance.

AT : How do you foresee connected and autonomous cars will change the way we live?

Maciej Kranz

MK : The possibilities are limited only by the imagination, but there are two opposing views on the impact of autonomous vehicles. One is that there may be no need for most people to own a car. Instead, cars from a fleet of autonomous vehicles will be summoned on demand, the same way you arrange for an Uber ride today.

Pricing models could be dramatically different, too, as neither a driver nor anyone to tip is involved. The government might even subsidise your trip, if one of the administration’s goals is to take individually-owned cars off the road.

The other view is that we may end up with more specialised or versatile types of vehicles, with new mobility models for offices, homes, or entertainment, where people can work, play, or sleep while on the road. In this view, consumers will be able to design or order more customised vehicles to suit their own personal demands and, because of advances in software, technology costs will go down.

I believe the future will be a combination of the two – a mix of more ownerless and driverless vehicles along with a new market for purpose-built vehicles. Whichever scenario unfolds, the impacts of these changes will disrupt the entire value chain, from car manufacturers, insurance companies and car dealers to suppliers, parking lot operators, and various delivery systems.

Maciej Kranz, VP, Strategic Innovation, Cisco Systems was interviewed by Annie Turner, editor of IoT Now Transport. You can read the second part of their interview here.

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