IOT & Supply Chain – Is it right to go?
In supply chains throughout the world today, a technological transformation takes place.
As companies work to build agile, digitally-activated supply chains, their greatest challenge is to determine which tools drive real business value.
Investments in logistics technology are on the rise, with organizations planning to spend almost $ 88 billion on supply chain technology by 2022. Of these investments, $ 2.63 billion will include so-called ” disruptive ” technologies, as companies are taking advantage of the latest innovations to strengthen their competitive edge.
Emerging technologies such as artificial intelligence, machine learning and blockchain promise to improve automation and visibility across the supply chain, allowing companies to consider a variety of options when building their supply chain technology stacks.
The Internet of Things (IoT) is one of the most popular technologies with billions of connected devices worldwide capable of providing highly nuanced insights in real time. However, while IoT has real potential to optimize supply chain operations, companies need to balance this potential with implementation costs and risks. The question remains for many organizations: should IoT have a future in my supply chain and, if so, how far?
Comprehension of IoT
According to Gartner, the number of devices connected to the Internet has proliferated in recent years, with an estimated 8,4 billion in 2017 and an astonishing 20,4 billion in 2020. These intelligent devices range from security cameras to electric meters, with industry – specific applications expected to account for 3.2 billion devices by 2020. Sensor – based logistics offers clear advantages for supply chain managers to improve visibility and control, including real – time updates for each shipment.
Tracking of locations is only the start, with IoT devices designed to detect subtle changes in humidity, temperature and other factors. Based on this information, organizations can monitor perishable shipments or fragile goods, such as electronics, carefully to minimize the risk of damage or spoilage.
The predictive analysis is more powerful. Connected devices produce a tremendous amount of information that can improve business decision – making when used correctly. By setting up a centralized technology platform that collects and analyzes all relevant data from the supply chain, companies can gain insights into carrier performance, average lead times and other key indicators.
The advantages of IoT could add up to high value for companies, with Cisco forecasting a $ 1.9tn increase in supply chain and logistics operations by 2025 through higher revenues and lower costs. According to Deloitte, 74 percent of companies already implementing IoT in logistics report a related increase in revenue.
The truth, however, is that many companies are simply not yet there. One survey in 2018 found that 95 percent of business leaders do not fully capitalize on digital technologies in their supply chains, with only 54 percent of future IoT reporting plans. And Gartner noted in a 2018 study that the majority of IoT supply chain technology will prove its concept well into 2021.
Should you connect?
The advantages of enabling containers or shipments with IoT devices must outweigh the costs in a historically low – margin, cost – driven environment such as logistics. High – value electronics, hazardous shipments or cold-chain goods are the best candidates for this type of tracking in order to minimize the risk of robbery, spoilage, delays and other disruptions.
On the other hand, even a $ 10 sensor for a container can be a hard sell to a large – scale retailer who has to rein in transport costs to keep customers ‘ prices competitive. The growing expectations of customers “anywhere, anytime ” are changing the nature of today’s supply chains, with costs increasing, as companies rely on expensive air freight and more last mile delivery. With barcoding already prevalent in containers, it is unlikely that shippers who require little more than location tracking will find the ROI they need in the IoT implementation.
Instead, many companies may first experience an IoT-enabled supply chain through their carriers ‘ downstream use. For companies with large asset fleets, improved data on location, productivity and other factors can give their companies and ultimately shippers significant value. For example, equipping chassis with sensors could help ocean freight carriers solve the perennial problem of finding enough chassis to efficiently move containers, reducing delays for their own customers.
For shippers, the measurable value could be driven by the litmus test for the adoption of any new supply chain technology. The key factors to consider before IoT is implemented include:
How data can be used. The sheer amount of information produced by these devices must be translated into understandable, workable insights. A supply chain platform is essential to collect and manage data in a way that improves the visibility and control of the supply chain.
How to measure your ROI. If you move goods through a complex, multi – part supply chain, things can go wrong–and often do. Your investment in technology should aim to eliminate these failures where possible by improving visibility, reactivity and predictability. Consider your most powerful KPIs, from reducing spoilage to reducing transit delays, to measuring the value of IoT to the bottom of your business.
How to guarantee safety. The protection of the integrity of your existing supply chain is vital if new investments are made. An experienced supply chain partner can help you to implement new tools so that operational risks are minimized.
How it fits my supply chain as a whole. True optimization of the supply chain requires understanding how your tools, processes and people can work efficiently together. The right partner should take a holistic look at your entire supply chain and help you implement the technologies that meet your unique business objectives and requirements.
While IoT offers the logistics industry a tremendous promise, investment in sensor – based logistics and other emerging technologies remains a strategic and complex decision. By looking at how each investment fits the big picture, companies can build modern, digital supply chains that put them ahead of the competition.