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Speaking at the annual World Industry Forum, sponsored by Dedham, Mass.-based ARC, Chatha noted that many people had dubbed 2012 the Year of the Mobile Device. Given that there are conservatively estimated to be about 10 billion connected devices, he said that perhaps 2013 should somehow memorialize the importance of connectivity and all that it promises.
He says safety notifications, cost-saving maintenance alerts and tips on extending the life and usefulness of products that we buy are among the benefits of devices of all kinds - ranging from cars to refrigerators - that are linked to the internet.
Chatha spoke with SupplyChainBrain editor in chief Russell Goodman at ARC's annual conference, held this year in Orlando, Florida.
Q: You've suggested, only half-jokingly, I suspect, to have 2013 named the Year of Connected Devices. Why is that?
A: Chatha: Just last month, for example, at the Detroit automotive show, several automotive companies announced their connected car initiatives. As part of this, they are planning to connect cars to the internet. They also launched their application platforms.
Q: And the importance of that?
A: Chatha: They could actually use that to communicate with drivers. When you come to think about that now, some of these automotive companies are planning to replace the dashboard with a tablet. We say that's great for the consumer who will be connected to the rest of the world, but it also has a lot of impact on automotive companies themselves. With the connectivity of the internet, auto companies can continuously stay in touch with drivers and customers.
We also know all of the cars these days have a so-called black box, which monitors the performance of the car. Right now, most of the time that black box is read only when you take the car to the shop and a mechanic connects a PC with it. When the car is connected to the internet, in fact, the automotive companies can start reading this black box and actually get the data in the cloud. With their platform they can run diagnostics in case there is a problem. And if there is, they can alert you. So this thing gives a powerful capability to automobile companies to not only stay in touch with customers but also keep them safe by alerting them if there is any issue in the future.
Q: Do you see applicability anywhere else?
A: Chatha: Increasingly, more and more home appliances are also going to be connected with internet. In fact, many, many companies forecast that we will have over 50 billion connected devices in 2020.
Q: You've called these devices intelligent and useful. Explain what you mean.
A: Chatha: We can continue with our example of the car. Certainly automotive companies have many sensors to make the car more intelligent. Obviously, because they connect to the internet. They have also an app platform that services all these customers. It could be somewhere in in cloud. Increasingly, and on an ongoing basis, your automotive companies will start to develop a community.
They have already developed - and are creating - new apps for the cars, depending on consumer needs.
That means we will have access to new services from the car companies because they are adding a lot more intelligence, using analytics to predict and analyze information - all of that makes these devices much more intelligent and useful going forward.
Q: You say remote asset monitoring is a really important development. Walk us through that.
A: Chatha: These days all companies are trying to get the most out of their product. A car is a product when you buy it, but once you buy it and automotive companies want to service it, the car is your asset. The company can continuously monitor this asset and tell you if there is any issue. We see with jet engines that aircraft companies are already doing this. It's the same thing with some appliance companies. Increasingly, they can keep on monitoring their product in our homes. If something goes down, they can alert us in advance. In other words, remote asset monitoring will become more and more popular. It's how companies will increase the life of the product or the usefulness of the product.
As part of this, the manufacturers may suggest to you that you are not maintaining the product properly. They can actually guide us on how to maintain their products properly over the internet. The product lifecycle can be increased or the usefulness to us could be improved. The manufacturers can really help us take care of the product so they last longer and are most useful to us.
Q: What about the financial benefits we might realize through use of connected devices?
A: Chatha: Interestingly, GE published a paper on this. Their team made some estimates based on, say, a 1-percent improvement in energy efficiency of jet engines. Or maybe a 1-percent savings in energy in industrial plants. They did these calculations and came up with a huge number. GE estimates connected devices can add $15tr to the global economy in 2030.
In other words, once you start monitoring all of these products, an automotive company, for instance, knows where all of their cars are, who the owners are, and they really know the performance of the cars. They can help you a lot, making sure you are getting the most out of the product. The same with a home appliance or whatever it is. The same thing now is happening with industrial plants.
What in essence is happening is, connecting products to the internet and adding more intelligence is becoming much more inexpensive. Because you're talking about adding intelligence to billions of devices. Once you do it, once you have that volume, costs certainly go down. We see that with smartphones and so forth. For a couple of hundred bucks, you can have the whole PC in the palm of your hand.
Q: You feel GE is on to something there with those figures?
A: Chatha: I totally agree with GE's estimates. The benefits financially are enormous by connecting devices to the internet and then intelligently monitoring them. I think it takes the usefulness of the devices to a whole other level.
ARC Advisory Group
Keywords: supply chain management, supply chain management IT, SaaS, supply chain systems, remote asset monitoring, internet of things
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