The Internet of Things and 21st-century supply chains
We have been involved in many discussions of late on the topic of the Internet of Things and the question of exactly what areas of supply chain management it will benefit the most. We have seen a great deal of literature on the topic and one of the most clear and concise articles we have come across is from the software services provider Intelyt. This time and next, we will share with you its key content.
As business becomes ever more competitive, corporations must seek every opportunity to control and reduce costs. Of all business operations, supply chain optimisation is perhaps the most critical place where increased control and visibility reduces costs. Simply put, supply chain visibility is the ability to identify, capture and share milestone events as assets move through a business process. There are two high-level outcomes that occur when greater visibility is applied to supply chain logistics:
- A business can react in near real-time to errors or changes in other conditions that could have a critical financial impact on business operations.
- It allows for the capture of data for future "big picture" analysis and process refinement.
But tracking packages is not new technology. Various methods have been used to track the progress of shipments along their transport path for a long time. We currently track shipments as they touch specific "information nodes" on the journey to their destination.
The contractor initiates the shipment with a tracking number, and as its status changes, we are notified -- the shipment changes carriers, it leaves the port, it's then transferred to a customs broker or expediter, then it moves on to a domestic carrier, and finally to a "last mile" delivery carrier. We get notification of each of those changes in status.
But these notifications represent a human, involved in scanning a parcel to say where the shipment is currently located. These notifications are not telling us where our shipment is at any given time, or alerting us to other important factors affecting our shipment.
For example, what happens if we want to know whether the shipment is delayed en route due to traffic conditions, or we want to ensure that it isn't exposed to extreme shock, or variable temperature extremes? What if we want to make sure that every single carton is delivered, and we want notification if one carton is separated from the others? You are often left to take the shipper's word for it, and you shoulder the risk of your parts being lost or damaged on arrival. What if you're looking for more data, to help understand further opportunities to optimise a supply chain, or reduce risk in your supply chain?
Better technology and deeper connectivity now make it possible to collect more detailed data, bringing security and efficiency to the 21st-century supply chain.
Effects of the IoT on supply chain technology: The availability of cost-effective global communications, inexpensive processing power and a seemingly unending stream of data has unlocked what we now call the Internet of Things. IoT technology implies that many everyday items around us have network connectivity, letting them send and receive data for improved performance. For example, we now can get notifications when there's a faster route available for us to take to our next meeting across town.
The impacts of IoT in the supply chain industry are enormous. IoT innovation lets us enhance supply chain operations by intelligently connecting people, processes, data and things via devices and sensors.
The deeper intelligence is manifest in several ways when it comes to supply chain data and intelligence: from automation of the manufacturing process, to more efficient and secure transport solutions, to improved visibility within the warehouse.
One of the most important benefits of capturing and leveraging data through the IoT is the ability to lower costs by operating on a more "just in time" supply chain model. This decreases the amount of capital tied up in logistics and hard goods in transit or sitting on shelves. The more visibility there is into the supply chain, the more opportunities there are to improve it.
A supply chain optimised through an IoT solution is also more secure, and lets any company bring products to market faster. In fact, supply chain optimisation through an IoT solution can be seen as a competitive advantage in all of these areas.
Intelyt's view is that there are five key components to consider carefully:
1. Intelligent, cost-effective devices.
2. Global communications networks.
3. Software solutions.
5. Service offerings.
In our next column, we will continue with the discussion in more detail.
The Link is coordinated by Barry Elliott and Chris Catto-Smith as an interactive forum for industry professionals. We welcome all input, questions, feedback and news at: BJElliott@ABf1Consulting.com, firstname.lastname@example.org