QiSOFT Blog - IIoT & Cost of Quality

26 July, 2021

How does the Industrial Internet of Things (IIoT) help reduce your cost of poor quality?

A brief history of IIoT

The Internet of Things (IoT) and Industrial Internet of Things have been with us for many years. But, unlike the IoT, there’s a lot more to the IIoT than just shouting, ‘Hey Google, what’s the buffer inventory around machine 243 like?’

The origins of the IIoT date back a lot further than many people realize when the first Coke machine was fitted with sensors to report its inventory level back in 1982. Then, in 1994 the concept of transferring data between industrial and domestic devices was first discussed. 

The IIoT idea gained momentum in 1999 when RFID (Radio-Frequency Identification) was pinpointed as fundamental to its success. The concept was simple—if devices had unique identifiers, then computers could track information from them.

The emergence of cloud computing and the OPC unified architecture in the early 2000s provided the security systems necessary for devices to begin transmitting data, predominantly for inventory control, and the IIoT was born.

The IoT works at the consumer level and is all around us in our everyday lives, and most of us will use IoT devices without realizing it. For example, if you have a Google Home, Apple Home Pod, or Amazon Echo device to control your lights or heating, you’re using an IoT device. Often, some of these IoT devices are simply a gimmick—do you really need your fridge to tell you how much milk you have? In that respect, you could say that IoT devices provide interesting information but aren’t essential to anyone’s life.

However, the IIoT raises the stakes and takes the technology into the industrial environment. IIoT systems are used in critical industries such as power generation and healthcare, where system failures will significantly impact people’s lives.

What’s the difference between IIoT and Industry 4.0?

Often these two terms are used interchangeably or merged, but they are very different. IIoT relates to the interconnected devices automatically transmitting and receiving data, whereas Industry 4.0 is a general term covering the whole process of digitalization in a modern manufacturing plant.

In some ways, you could see the IIoT as an integral technology within an Industry 4.0 environment. It’s an essential component of any digitalization project which relies on the automatic transfer and receiving of data between machines and devices.

Using IIoT technology allows businesses to gather and distribute data in real-time, allowing personnel to make quick decisions based on accurate information.

What are the key features of an IIoT system?

Data Collection
Sensors fitted to the process plant and machinery can generate raw data. These can be base, smart, or intelligent sensors.
Base sensors provide data on specific criteria. Smart sensors add a layer of processing to the base data, such as converting analogue signals into digital ones. In addition, intelligent sensors incorporate self-validation and adjustment to changing conditions.
Actuators are combined with the sensors to provide an action based on the data received. These actions could include starting or stopping the machine or triggering an alarm to alert the operator. PLCs then link the sensors and actuators together.

Data Communication
All the devices in the system must communicate with each other to share information between other hardware and software assets. This can usually be achieved within a manufacturing plant through hard-wiring via ethernet cables, Bluetooth, WiFi or RFID. 
Software applications, such as QIS can then turn that data into actionable information. 

While many manufacturing operations can work with automatic feedback loops, there has to be a human element in the decision-making process, particularly when looking at quality control. Quality management staff need to be able to interrogate the data and make adjustments to the process. If that happens in real-time, then quality defects can be reduced considerably.

To summarise, the IIoT is a crucial part of an Industry 4.0 style manufacturing operation, but how can it help to reduce the cost of poor quality?

What is the Cost of Poor Quality?

The Cost of Poor Quality (CoPQ) is part of the total equation used when a manufacturing organization calculates its total Cost of Quality. The other part is known as the Cost of Good Quality and isn’t the subject of this article.

The CoPQ is the sum of all the costs related to product failure or non-conformance, such as scrap, rework, wasted capacity and processing time, wasted materials and energy, warranty claims and returns. However, all of those elements will create further costs such as increased overtime to rectify production faults, increased machine downtime waiting for new products, and damage to the company’s brand and reputation.

How does IIoT technology help reduce the CoPQ?

It is estimated that around 20% of a manufacturing organization’s direct costs are attributed to poor quality, so it’s a critical element to control. Given this staggering number, it’s amazing that companies don’t invest in the available technology to reduce those quality costs. Instead, companies will spend millions of dollars on ERP and CRM systems while their quality management systems are fragmented into spreadsheets on local computers.

IIoT technology brings all of those costs of poor quality onto the centre stage. Quality management teams can review and action data in real-time, as the live SPC data is communicated from the processes.

In a complex manufacturing organization with multiple processes, communication is challenging. As all the functions are connected, the downstream operations need to know what’s happening upstream to plan accordingly. IIoT technology combined with a software platform like QIS makes that information immediately available throughout the company. 


Although there is a cost to taking your manufacturing down an Industry 4.0 route, the increase in operational efficiencies and reduction of quality-related expenses make it a no-brainer of an investment.

QIS is industry-leading quality management software for manufacturing organizations. It integrates into your IIoT system and turns mountains of data into actionable information for your quality teams to reduce your Cost of Quality significantly.

For more information, please email our sales team info@qisoft.com

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Reduction in waste, downgrade and rework
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Reduction in the cost of internal and external failure


Since 1986, we’ve been helping manufacturing organizations across the world transform data into critical insight in order to achieve continual product and process excellence.

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