In the world of supply chain and logistics, embedded RFID and sensor technologies have been used in varying degrees for well over a decade. Yet, somewhat ironically, the concept of IoT has been slow to take hold in that space as high costs and software issues prevented its proliferation.
That may be about to change. Defined as “a network of physical objects that contain embedded technology to communicate and sense or interact with their internal states or the external environment,” IoT today is more realistic in the supply chain than ever before— thanks largely to a convergence with numerous other sensor types extending across all aspects of transportation systems, e.g., the vehicle, the infrastructure and the driver or user.
Yet, having the technology to collect the necessary data is only a best first step.
The problem is both vast and simple. The data that companies need to streamline their supply chain and logistics operations is pouring in from a myriad of touch points and technologies, but the tools to accurately, efficiently and inexpensively aggregate and leverage that data for improved supply chain visibility and tracking are not yet in place. Accessing the necessary insights with existing technologies is akin to trying to break a flood levy for a cup of clear drinking water, creating a looming wave of data that threatens to overflow while continuing to hold the Internet of Things back.
While the IoT has enormous potential for supply chain, it takes a sophisticated organization to truly understand and embrace a new “business as usual approach.”
Today, most companies are focused on general visibility and better ETA alerting and communications capabilities that are still relatively rare in the supply chain and logistics space. The next big undertaking for today’s logistics providers will be convincing their leadership that the IoT will benefit the bottom line and won’t ultimately cause any disruption to their customers.
In fact, the result of IoT implementation should be seamless improvement. Applied correctly, the real-time tracking of RFID and other sensors enables shippers and carriers to dynamically track orders and update routes in real time based on unforeseen exceptions or variables such as construction projects, accidents, or even weather delays.
As any logistics manager knows, even minor disruptions to the supply chain can cause massive headaches at the end of the line. One example still fresh in everyone’s mind is last year’s holiday season delivery debacle, when thousands of customers waited until two days before Christmas to put in their e-tail orders, landing companies and carriers in a frenzy. For shipping companies like USPS, FedEx and UPS that are also most closely linked to the consumer marketplace, needs vary dramatically from day to day and even hour to hour, making accurate data especially critical moving forward.
There is a pressing need to manage exceptions and ensure compliance with stated delivery windows to understand what’s needed to service a particular area or type of building—e.g. an apartment building vs. an office vs. a house. The IoT ultimately will enable companies and their staff on the ground to better access the information they need in order to prepare for and react to disruptions in real time.
As referenced above, the problem isn’t necessarily that companies don’t have enough data, but that they have far too much. To effectively embrace IoT, successful companies will need to not only have the data streams from on-board vehicle diagnostics, pallets and package barcodes, but also the capability to direct that information in a way that enables them to manage by exception in real time, while also viewing the data in aggregate across weeks and months to identify and prioritize solvable inefficiencies.
As companies’ ability to hone in on key data continues to grow, the new questions are very likely to be, “how can I take all of this data from the technologies I’ve deployed, and use it to optimize my overall supply chain? How do I look at the cumulative data to identify the weakest links in my supply chain and then track when, where and why those weaknesses occur (for instance, which cross docks are underperforming)?”
Looking ahead, as costs come down and technology improves, the industry is certain to see the IoT embedded in nearly every item that moves through the supply chain on a daily basis—assets like pallets, boxes, trailers, etc. are likely to be among the items that will use same technology as consumer wearables do today—making it easier to keep tabs on products from end to end.
According to Peter Middleton at industry research firm Gartner, “By 2020, component costs will have come down to the point that connectivity will become a standard feature, even for processors costing less than $1. This opens up the possibility of connecting just about anything, from the very simple to the very complex, to offer remote control, monitoring and sensing … The fact is, that today, many categories of connected things in 2020 don't yet exist. As product designers dream up ways to exploit the inherent connectivity that will be offered in intelligent products, we expect the variety of devices offered to explode."
This massive growth represents an equally massive opportunity for the entire supply chain and logistics industry—but only if companies get on board. It won’t be enough for single companies or parts of the supply chain to adopt the IoT. True, overarching supply chain visibility will only be a reality when the industry makes the transition to the tracking of goods in constant movement—if the team in the last mile of the supply chain has the tech, then the team downstream in the supply chain should have it to.
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