The biggest benefit to the electronics supply chain — data — will become the greatest challenge as the ability to interconnect information from a plethora of devices and sensors not only means streamlining demand forecasts, and sales and shop floors processes, but also learning more about customer behavior.
Electronics manufacturers are not strangers to data. The National Association of Manufacturers has been spearheading a movement around Internet of Things (IoT) data for more than a year.
Chief procurement officers (CPOs) at OEMs will turn a plethora of data into information to improve supply chain operations. The data will come from manufacturing, retail-store censors, online metrics, and Internet-connected devices such as mobile phones and wearable gadgets.
The research firm Gartner forecasts 6.4 billion Internet-connected devices in 2016, up 30% from 2015, reaching 20.8 billion by 2020. The research firm estimates that this year the world will see 5.5 million new “things” connected every day.
Benefits will come from operational performance such as improving production and maintenance, as well as build-and-distribution cycles. It requires providing information back to suppliers that tell them in real time what's selling out from the store shelves.
Challenges become sorting through the data to determine what's useable and what's not.
IBM estimates that each day the world creates 2.5 quintillion bytes of data, so much that 90% of the data in the world today was created in the last two years.
Manufacturing struggles with a learning curve on making the most of this wealth of information. The new Global Connectivity Index (GCI) by Chinese manufacturing Huawei measures how 50 nations continue to progress using information and communications technology. The 50 countries account for 90% of the global GDP and 78% of the global population.
The sector with the highest digital transformation score points to banking with 43.4%. Manufacturing with a score of 22.5% has one of the lowest, beating agriculture by a mere .5%. The report says that those industry that score well are a “major contributors to GDP, and critical for competitiveness and economic health.
Having the data means nothing if companies cannot ingest and analyze it. Supply chain will take advantage of that data through a variety of methods including analytics platforms. IBM Watson, and Newark elements14 released in February an IoT developers' kit based on Raspberry Pi micro-computer boards using energy harvesting wireless sensors from EnOcean.
Richard Curtin, global director of strategic alliance at element14, said bringing data from IoT devices into an analytics platform could help navigate stock control in the warehouse and monitor inventory in and out of distribution hubs. It would alert procurement managers of the need to replenish inventory on the shelves by bringing in the data from the hubs and integrating it into any analytics package to build out the supply chain.
Interesting that when semiconductor manufacturers and analysts in 2002 spoke about how the Internet of things would change electronics manufacturing supply chain they did not connect how it would influence supply chains at electronics or consumer product goods companies.
They didn't talk about how the data from billions of devices would support analytics or radio frequency identification (RFID) at companies like Wal-Mart Stores and Target that tracked the movement of goods from manufacturing facilities through distribution centers, warehouses, and on to retail store floors.
They didn't think about Coca-Cola's move to collect data from Internet-connected vending machines to help the company learn more about its customers, or help with forecasting products (such as Diet Coke, Fanta, Sprite, and Vitamin Water) per location. They also didn't think about the ability for Pitney Bowes to keep replacement parts on hand to fix broken automated mail machines.
These companies closer to the customer have already begun to use IoT data to streamline their supply chain. In fact Coca-Cola collects more than 100 points of data daily through its vending machines. Derek Myers, group director, strategy and commercialization, Coca-Cola North America, at OMMA SXSW (South By Southwest) told attendees that this spring it will roll out a loyalty program as part of a cashless payment system integrated into a mobile phone's native platform such as location services, Bluetooth, and power management apps that run behind the scenes.
Although mindboggling to think, Myers said someone completes a transaction on a Coca-Cola vending machine more than 100 times per second. Each payment through Apple Wallet or Android Pay will identify the consumer, type of drink purchased, and location of the machine. In addition to getting to know its customers better, Coca-Cola will use the data to improve its supply chain.
Other industries have already begun to tie in IoT data to run their supply chain more efficiently. Pitney Bowes, the global company founded in 1920, created a method to pull in data from thousands of production mail machines located at individual corporations worldwide. The platform, Clarity, analyzes the data in real-time via the Internet, allowing project leaders at banks, telecom carriers and other large corporations to manage machines and processes that produce and send physical mail.
Pitney Bowes processes the data and sends it back to their client, allowing them to gain view into how their entire production floor runs in real-time, how they compare to industry benchmarks, and where they can make improvements.
How is data going to inform and change the electronics supply chain? Let us know what you think in the comments section below.