To say that the internet of things (IoT) is taking supply chain management by storm is something of an understatement. In a crunch to collect real-time information and improve operational visibility, almost every object imaginable is being embedded with sensors, processors, software and other technologies that enable the exchange of data with other devices and systems over the internet. They’re also helping supply chain managers to better understand their operations.
IoT-powered devices provide detailed information on everything from the movement of goods to changes in the freight environment and more, in real time. This gives supply chain managers a transparent view into the delivery of goods from manufacturer to distributor, seller and eventually end-user, in ways never before thought possible.
To better understand where IoT is headed, however, it’s important to examine how it got started.
In a way, IoT was originally developed to serve as a supply chain tool. One of the first use cases was with supply chain management. In the early 1980s, students at Carnegie Mellon University connected a Coca-Cola machine to the internet to help monitor when drinks were available and cold before making a trip to the machine. But beyond that, IoT development remained with hobbyists until fairly recently.
Security concerns, scalability, a lack of standardized protocols and price were the primary barriers for early IoT adoption. However, thanks to advances in cloud computing, security enhancements and other technologies, IoT deployment is now cost-effective, more secure and scalable. And because of the maturing of technology, IoT is now driving a revolution in supply chains worldwide.
Where Supply Chain IoT Is Today
Eyefortransport recently surveyed 600 supply chain decision makers to learn more about this trend and the top uses for IoT in supply chains. According to the survey, location, security and temperature are the top three types of information that companies are looking to gain from IoT in their supply chains. Location tracking has become the industry standard for IoT deployment in that area. Now, however, forward-thinking companies are looking to IoT to collect other types of data, including speed, humidity levels and vibration. The list will continue to grow as IoT gains in popularity.
IoT’s ability to obtain valuable information about cargo location, quality control and other measures is vital, because the ultimate goal for many is to improve customer service through better operational visibility. This includes the ability to provide customers with real-time updates on delivery speeds and time frames. Barcodes are still the leading type of technology for this purpose. But survey results show that IoT use has increased by 19%. The preference for IoT will continue as more companies see a return on investment from their IoT deployments. Currently, 24 months is the typical time frame for payback.
Where Supply Chain IoT Is Headed
Asset tracking is the tip of the spear for IoT adoption because it gives supply chain managers the data needed to make better decisions. This capability is extremely important when applied to the ocean freight industry, especially as shippers struggle to ensure the on-time arrival of inventory at retailers. Consider grocery stores, which currently discard approximately 30% of food received due to in-transit spoilage, overstocking in the store or fluctuating customer demand. IoT can have a significant impact by helping to shift shipping workflows from supply chain to demand chain.
This shift will mean expanding IoT beyond traditional logistical use cases to better align supply orders and demand curves. In addition, with the ups and downs of ocean freight prices, IoT’s tracking capabilities, paired with market intelligence on rates and supply-side data, could make for the perfect supply chain optimization solution.
“What you don’t know won’t hurt you,” the old saying goes. Those of us in the supply chain world know this is far from the truth. What you don’t know can hurt you, and can impact your entire supply chain. That’s why the data that the IoT can provide is so critical.
The downside to having all of this data is that supply chain managers need a way to manage all of the problems that IoT data reveals. Say that you start your IoT implementation by monitoring 60 shipments per month. It’s feasible that you could manage the process without adding resources. Every time you receive a notification about a shipment deviating from its assigned route or stopping at an unauthorized location, you could simply call the vehicle operator to instantly mitigate the situation.
Now imagine that process scaled to hundreds or even thousands of shipments. It would be nearly impossible to take prompt action on red-flag issues without adding more bandwidth. This phenomenon is commonly known as “data deluge.” But simple planning ahead of IoT deployment can help save your organization from headaches in the future.
There will be challenges associated with integrating IoT into your supply chain operations, but the benefits — including greater efficiency, improved operational visibility, streamlined workflows and better customer service — are well worth the effort.
Zakhar Shapurau is vice president of research and development with Xeneta.
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