When you hear the phrase “Internet of Things” (IoT), people tend to think of electronics or wearables — the types of technologies that are driving adoption of a personalized, “smart” consumer lifestyle. Yet, there's more to the IoT story, specifically as it relates to the supply chain.
Supply chain management 2.0
In Gartner's recent press release, “Gartner Says a Thirty-Fold Increase in Internet-Connected Physical Devices by 2020 Will Significantly Alter How the Supply Chain Operates,” their point is clear: The IoT trend is going to impact businesses, too. In particular, the impact will relate to how supply chain leaders access information, among other things.
Enterprise Resource Planning (ERP) and supply chain management (SCM) have gone hand-in-hand for quite some time. The IoT revolution will bring about enhanced solutions that intelligently connect people, processes, data, and things via devices and sensors. Consider it SCM 2.0. This deeper intelligence can come to life in many different ways when it comes to supply chain data and intelligence — from automation of the manufacturing process to improved visibility within the warehouse.
IoT as a driver of in-transit visibility
In-transit visibility will play a prominent role in the future supply chain, as it's impacted by IoT. We know that the logistics ecosystem has many moving parts: Products are handled and transferred between the manufacturer, suppliers, the distribution center, retailer and customer. With this many touch-points within the supply chain, an agile, highly transparent, and collaborative supply network is needed in order inform those involved about the product's whereabouts and other specifications.
Cloud-based GPS and radio frequency identification (RFID) technologies are core to in-transit visibility, providing identity, location and other tracking information about products and shipments. They are the backbone of IoT as it relates to the supply chain. By tapping the data gathered by these technologies, detailed visibility of an item is provided throughout the entire supply chain. This allows supply chain professionals to automate shipping and delivery by exactly predicting the time of arrival. They can also monitor important details like temperature control, which impact the quality of a product in-transit, especially when you're handling foods, beverages, and livestock — for example.
Putting the pieces together
To provide an example for how IoT brings all of these moving parts together is as follows, let's consider the following: Putting an RFID chip in a pallet and a combined integrated device in the shipment vehicle, data is transferred into the cloud. Here, the devices can identify the pallet and share information about its position and status like weather conditions, traffic conditions, and driver-specific data (i.e., driving pattern, average speed). By combining real-time sensor data with environmental and other data, stakeholders can make efficient decisions that drive overall productivity. This moves the supply chain process from a reactive mode to a proactive one by offering information well before an incident happens. For example, providing information about a port closure, which could cause a shipment delay, enables the in-transit goods to be rerouted quickly and proactively.
Benefits for supply chain professionals
From the manufacturer to the end user, the Internet of Things means richer data and deeper intelligence for all parties in a supply network. By allowing devices to “talk to each other” in the right way, IoT can help supply chain professionals in the following ways:
- Reducing asset loss: Know about product issues in time to find a solution
- Saving fuel costs: Optimize fleet routes by monitoring traffic conditions
- Ensuring temperature stability: Monitor the cold chain — according to the Food and Agriculture Organization of the United Nations, about one third of food perishes in transit every year
- Managing warehouse stock: Monitor inventory to reduce out-of-stock situations
- Gaining user insight: Embedded sensors provide visibility into customer behavior and product usage
- Creating fleet efficiencies: Reduce redundancies — deadhead miles account for up to 10% of truck miles (according to the EPA), and 28% for private fleet trucks (via National Private Truck Council).
What to walk away with
While IoT in this application is still relatively new, supply chain professionals should keep a finger on the pulse to be informed of its benefits and potential uses within their businesses. Interconnected devices foster interconnected networks, which fosters the Internet of Things. In the context of supply chain, interconnectivity is key for success.