Getting products from A to B is one of the most fundamental challenges in business – so it is not surprising that a wave of advances are set to turn the industry on its head
IoT offers the unique ability to track and monitor objects in the real world like never before and this presents a range of advantages for supply chain and logistics. The most obvious breakthrough is the operational efficiencies possible with IoT. More than anything else, these breakthroughs enable companies to get a real-time view of their deliveries and supply lines, allowing them to more efficiently allocate resources or respond to adverse occurrences in the blink of an eye. IoT sensors attached to shipments can change the game in many ways.
In real time, a shipping or delivery company can analyse it’s loads and progress and update expectations accordingly. Amazon uses WiFi robots in its distribution warehouses get an instant picture of how healthy it’s supply chain is at any given moment. Any backlogs or emergencies can be picked up immediately. In an industry that needs to be lean and responsive, RFID, NFC and other tracking technologies are becoming indispensable.
From a fleet management perspective, most deliveries can’t be planned in minute detail in advance because of weather, traffic, or many other factors. This means that this leg of supply chain needs to be analysed in real-time. With a more data-oriented IoT view of a fleet, companies can leverage analytics to make better decisions about managing the day’s transport and deliveries.
Data is King
The clichéd saying ‘data is the new oil’ rings true when it comes to IoT and supply chain. While the operational benefits are most tangible, the retrospective analysis of all goods movement leaves a treasure trove of material for analysis that can improve processes and systems.
Many see the crossover between IoT and AI in logistics as the most beneficial area for development. This involves marshalling the vast quantities of data generated by IoT sensors and using machine learning to spot patterns and elucidate new best practices. Consider again a company like Amazon. With the amount of orders they fulfil on a daily basis the opportunity for tightening up their supply chain is huge, but it needs to be informed with rigorous information. IoT presents access to this information as needed.
Another dimension to IoT is also that the data is more tangible and useful for business partners than aggregate reports. Companies pooling their data resources won’t be using the same systems so the raw data as generated by the sensor is more transferrable than manually generated info on average order time, for example.
The World Economic Forum suggest that reducing administration barriers in the international supply chain could drive global trade by nearly 15 percent and global GDP by 5%, providing a huge boost to economies and job creation. Aside from making operations sharper and provide more data for retrospection, IoT is making supply chains more secure and transparent.
Sensors can be fitted to shipment to immediately relay if there has been any tampering or damage to the cargo. This is highly relevant to the food industry, where companies are equipping shipments with sensors that detect any breaks in the cold chain or spoilage and notify buyers and sellers immediately. Fraud and theft are also being combatted with sensors, since the provenance and transport of a good can be proven with reference to sensor data. IBM’s Food Trust Blockchain solution has already introduced distributed ledger technology into the human food chain for the greater good.
This intersects with blockchain technology’s mainstream adoption, since the data generated from sensors can be logged on a public blockchain which gives everyone involved in the sale more oversight of the conditions of its storage. All these details are stored on a public ledger like that of IOTA, and this can be independently verified and shared with ease.
Another big application of IoT for integrity in the food industry is farm-to-fork oversight of animal welfare conditions and verification via genetic tagging that the goods are in fact what they are labelled as. Food fraud may not seem as problematic as other pressing issues, but as the controversy around Olive Oil in Europe (with two thirds being shown to be fake) proves, there is a lot of money to be made from counterfeit.
Finally, IoT aids supply chain integrity by providing a complete picture of the health of fleet or machinery hardware at any given time, notifying companies in advance if they need to repair their machinery.
Support or Innovation?
Despite all these tools at their fingertips, a recent study from Accenture found that many supply chain professionals are not leveraging tools like AI and blockchain, unlike their C-Suite colleagues. A majority of the 900 supply chain leaders they surveyed said they believe their role is more as a support function (68%) or cost efficiency function (60%), whereas under half (48%) saw themselves as a competitive differentiator. On the flip side, 48% saw a skills shortage as a barrier to adopting new technologies.
Mohammed Hajibashi, managing director at Accenture and global Supply Chain sees the supply chain role as “not only a key differentiator but also ensures the sustained growth of their organizations”.
The fast and efficient adoption of the right new technologies that enable a new way of working, along with increased C-suite engagement with the supply chain function, are the keys to achieving growth via new digital business models that create new customer experiences, craved by the consumer
IoT makes supply chains more efficient, makes them easier to analyse, and makes quality verification much more straightforward, presenting an opportunity for supply chain stakeholders to drive innovation, profits and potentially competitive advantage for their organisation. Perhaps within the next few years, more emergent solutions and value-creation models will make the even the most change-averse deniers wake up to the fact.