Internet of Things promises to transform supply chain
The Internet of Things (IoT) heralds a new era for business in which we are able to measure, analyze and learn in much more granular detail than we have been able to before. Analyst Gartner says the Internet of Things will reach 26 billion installed units by 2020 - up from 0.9 billion five years ago -providing opportunities to streamline and develop business processes and the supply chain in response to market trends and conditions in unprecedented ways.
breaking it all down
The supply chain is a complex ecosystem. In part it is about the efficient management of materials to produce goods that can involve hundreds or even thousands of parts. Toyota, for example, tells us that a single car has about 30,000 parts. These parts are themselves made from raw materials, which will also come from a supply chain.
In addition to manufacturing goods or specifying services, the supply chain also involves other areas of any business, such as billing, financial systems, product planning and customer relationships. It is, in fact, relevant to the whole product lifecycle.
The Internet of Things can only play a central role in the supply chain if those involved recognize and take advantage of its potential. For some businesses, the planning process might mean a complete digital transformation to understand the relationships between people, processes, data and things (what Cisco calls the Internet of Everything).
While this is perhaps a daunting prospect, the potential rewards are great: IoT in the supply chain can help with the cost efficiency of production, understanding markets, managing supplier relationships, identifying, meeting and even forecasting demand, and responding to customer trends.
minimize supply chain risk
Getting goods from A to B is fraught with potential problems, many of which the IoT can help to mitigate. There are two key aspects to this: tracking and monitoring.
Containers, pallets and even individual items can be tracked, offering multiple benefits, something that has been known for many years. The military were among the early adopters: as long ago as 2002 the US Military decided that all equipment destined for Afghanistan was to be tracked by RFID replacing cumbersome, inefficient paper based systems.
Tracking data tells those waiting for goods precisely where they are and can be used to intelligently fine-tune manufacturing or other schedules where there are delays. The unexpected movement of tracked items can trigger automatic alerts, raising the alarm against possible theft. This is a growing problem: Freightwatch reports rising trends in cargo thefts worldwide, identifying theft hotspots and targeted classes of goods.
Goods which require particular temperature ranges, storage in a specific orientation, gentle handling and other precise conditions can be monitored, errors identified and corrected. Monitoring via IoT can even help protect against substitution of counterfeit or cheaper alternatives in the supply chain.
automation and big data
The supply chain doesn’t have to end when goods reach the end of the production line or the retail outlet. With the IoT it is possible to create more of a supply loop in which customer demand is identified and satisfied through existing products, or which learns about customer preferences so that future products can be developed.
For this to become a reality, business needs to understand how to get the most value from the massive amount of data that’s generated. Interpreted correctly, big data can allow systems to make automated decisions, inform supply chain alterations, help define consumer preferences and new products, deliver information to humans for interpretation and action, and more.
For example, Lockheed Martin uses the IoT to monitor the F-35 Lightning II jet, transmitting maintenance information to users around the globe and thus reducing maintenance costs, ensuring supply chain efficiency and increasing aircraft availability.
SAP has demonstrated a smart vending machine that knows your previous purchases and can give customized choices based on your preferences. Because the machine is connected to the Internet it can offer personalized services regardless of location, connect to other information you authorize, and offer added value. For the vending machine owner, the supply chain management to the machine is achieved through the IoT and big data, and the more reliable the experience, the more likely the provider will maintain a successful business.
back to basics
A futuristic vending machine might seem a long way from monitoring the movement of inventory, but both depend on the IoT and both streamline the supply chain. The speed at which the IoT is developing, and its potential to cut across most aspects of modern life, means anyone involved in the supply chain should think about its potential to transform their business today and be aware that there are possibilities we simply have not imagined - yet.
Find out more about the work that Orange Business Services is doing in the Internet of Things and M2M.