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Of all that the Internet of Things (IoT) promises, manufacturers seem most focused on supply chain efficiency, and with good reason. Under constant pressure to reduce costs, and get to market faster, but having limited ways to do so, IoT’s promise of “faster, cheaper and better” is alluring.
Getting less attention in IoT discussions is the potential for revenue growth through innovation. Practically speaking, it’s easier to improve an existing operation than to improve things that haven’t yet been imagined. That vision will get clearer as manufacturers get their IoT sea legs. But how much time is there? Digital native consumers have shown little patience in product also-rans, unless they come with a big advantage over their predecessors – faster, cheaper, better – and, undoubtedly, cooler.
“When manufacturers talk about being more competitive, they talk aspirationally about having a more agile supply chain,” says Charlie Covert, Vice President of Customer Solutions at UPS. “IoT strategies can help you create a more agile supply chain, but you need to extend that agile mindset to R&D, in order to keep up with today’s consumers.
Covert relays, however, that innovation doesn’t always have to start with R&D. He shares an example of what UPS Chief Information Officer, Juan Perez, calls the company’s “Innovation Cycle,” in which innovations created to improve operations have, in turn, evolved into popular products and services for customers.”
Covert says, “In our 100-year history, we’ve been IoT pioneers, of a sort, by connecting our operations through sensors and scanners, and then studying the data, so we can make improvements.” He adds an example of one such innovation, UPS Package Flow Technology, which evaluates and optimizes every step in a delivery cycle – from the way a package is routed and tracked to how it’s loaded and then delivered. “The visibility provided by Package Flow Technology then led to breakthrough customer delivery options, like the ability to intercept packages, as well as alternative delivery options provided through the UPS Access Point Network and UPS MyChoice.”
The Internet of Things has created the best and worst of times for Research and Development. On one hand, an influx of attention and funding for digital advancements is an innovator’s dream. On the other hand, the R&D teams of today tend to lack the range of expertise needed to get disruptive products to market. Specifically, virtual and augmented reality, Bluetooth beacons, RFID – not to mention the growing murmurs about Blockchain technology – are requiring companies to open their doors to some surprising collaborators.
Such collaborations were coined “Industrial mash-ups” in a paper by Ernst & Young and Harvard Business Review. Those alliances can come together faster than M&A allows, and can “develop new products and services rapidly by piecing together components from an ecosystem of collaborating partners.”
Looser alliances also help companies explore new technologies with expert help from each field. All parties win through data and knowledge sharing. For example, UPS has collaborated with Fast Radius and SAP to develop a digital distributed manufacturing network for on-demand 3-D Printing. A separate UPS collaboration with Cy-Phy Works tests the use of drones for both commercial and humanitarian deliveries.
Covert adds a broader perspective on the value of partnerships. “Smart companies know that, in order to stay on top, they’ll have to be open-minded. Companies owe it to their customers and themselves to get outside of themselves, and to catch up with or get ahead of emerging tech.”
It seems that data from a connected supply chain would make it easier to predict consumer needs and wants. “Not necessarily,” says Stuart Marcus, Vice President of UPS Customer Technology Marketing. “Not too long from now, someone’s home digital assistant will place an order without consulting its owner, because an algorithm said so, which raises an important question: First, how will we have to change our communications if we’re unable to leverage the power of emotion and loyalty?”
Even if a digital assistant can’t order on its own, it can offload decisions using learned preferences or pre-programmed logic – consumer reviews, for one. It’s been predicted that digital assistants will eventually replace web browsing, changing forever the way consumers receive and digest product information.
“It‘s a little over ten years since smart phone platforms launched. Now, many of us can't imagine living without our favorite smart phone or apps,” Marcus notes. “The same thing's going to happen with the Internet of Things.”
Leaders are understandably wary about IoT when there are still so many unanswered questions. What standards will emerge? What is a realistic return-on-investment? And perhaps the biggest question of all, where to start?
“The hardest step in enterprise initiatives like IoT is often the first one,” Covert says. “If I were advising a customer, my simple advice would be to get an extended team around the table and start talking. The next steps will flow from there.”
Covert suggests that the extended team would include department heads who are not regularly at supply chain meetings, such as R&D, Marketing, IT, Sales, Human Resources, and Customer Service. He also makes a case for bringing trading partners to the table.
“Having UPS involved early in the process is really important. It’s incredible what can happen when your business strategy and supply chain strategy are in perfect alignment.”
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