There’s a ton of clamour right now about the Internet of Things and its effect on supply chains. So what is the Internet of Things? How does it work? The IoT is a massive network of linked devices and people collecting and sharing data about their use and conditions. As more objects achieve accessibility, the IoT expands considerably. IoT’s emergence has started, and companies must be ready to put up with it. Let’s see how this technology optimizes the supply chain.
In a survey conducted in 2019 ( State of Supply Chain Innovation Survey), 56% of supply chain leaders stated that they were planning to invest in sensors and the Internet of Things (IoT) in 2019.
Companies have taken a few steps towards IoT adaptation and productive management. Supply chains can now leverage this technology to the possible advantages it offers. Let’s look more closely at how the IoT in the supply chain will transform:
1. Inventory Mangement
Inventory management is one of the most problematic areas in supply chain operations. Organizations not only need to ensure that they have enough materials on hand to deliver orders; they also need to place orders tactically for a timely delivery.
IoT solutions provide comprehensive insights into the status of inventory. By monitoring physical factors such as leakage or broken packaging, and weather patterns, including humidity, temperature, and acidity, businesses obtain an analysis of the factory’s status.
IoT systems make it easy to upgrade asset information. Instead of manually recording the data into a spreadsheet, the manager may rely on the network to update all properties’ status. The Internet of Things increases asset monitoring in retail by adding an RFID tag or barcode to each item. Supply chain management can quickly obtain key insights on each item—package material, storage manuals, and so on. Traditional calculations can increase the probability of errors, which will prove critical as more additional supplies and shipments will be bought and would increase costs.
2. Superior Tracking
According to Forrester, between 58% and 77% of the surveyed organizations consider the location of objects, containers, and personnel to be the crucial fundamental functions of IoT solutions. Sensors monitor pharmaceutical products to ensure product quality, even after leaving the warehouse, since they need temperature control. Sensors can integrate data from sensors with business information systems to provide intuitive reports and analytics.
Internet-connected trackers use long-range networks (LPWANs) to allow businesses to track particular products during their delivery journeys. In the same way, satellite trackers offer monitoring data on an object nearly everywhere globally, including in places that do not have cell coverage. For instance, Volvo uses a cloud-based network (with IoT-enabled devices) to track car parts shipping from various countries. Bluetooth tags and beacons provide monitoring data in smaller, more restricted environments, manage consumer traffic, and deliver marketing communications to consumers.
IoT can diagnose in-transit inventory issues, such as leaks, irregular gestures, and the transport medium’s condition. Maintaining the temperature of perishable goods is also something IoT can trace. According to the Food and Agriculture Organization of the United States, up to one-third of food perishes en-route each year. IoT can reduce this waste based on linked sensing technologies. It facilitates the sharing of critical information in real-time with customers, thus alleviating chaos. Traffic delays are one of the most frequent sources of late delivery and supply shortages. IoT can control vehicles’ position and speed by using sensor-enabled systems, and maintenance warnings can be issued.
Delivery firm DHL and tech giant Cisco reported in 2015 that IoT innovations would impact more than $1.9 trillion on the supply chain and logistics business.
3. Manufacturing Automation
Automation can ensure that some replicable practices are carried out regularly without manual execution. IoT provides better visibility, analysis, and guaranteed throughput, which will lead to better overall control. Information flow allows devices to automatically adjust their operational activities, drive smart manufacturing, and provide feedback loops for all interlinked devices. A classic example is Nissan (Motor Company); it relies on IoT automation to link separate industrial plants and introduces smart warehouse solutions in its warehouses.
With the help of automation, supply chain operations can be performed more consistently and on budget.
According to Statista, IoT devices’ installed base is expected to expand to almost 31 billion worldwide by 2020 and will be 75 billion by 2025. These devices improve automation in the warehouse by reducing handling costs, real-time tracking, and improving operations and forecasting accuracy.
4. Advanced Analytics
Flexis asserts that the proportion of supply chain disruptions caused by severe weather events in 2018 is 62%.
Advanced analytics can save your organization massive amounts of money and time. With such a considerable percentage of the supply chain disruptions caused by seemingly unforeseeable weather events, insights into the operations are crucial. Optimal shipping routes and optimum delivery times to ship your goods around these incidents can help save massive.
IoT also maximizes production schedules. Through precise figures, firms are aware of their inventories’ condition and can carry out orders confidently. They will continuously track conditions during shipment to anticipate and avoid complications that are historically related to the logistic process. And they will exchange knowledge with consumers, increasing supply chain visibility.
As per the IDC and SAP reports, IoT will improve shipping speed and provide greater visibility across transactions in the future, contributing to 15% competitiveness in supply chains.
IoT enables shippers to define inventory storage specifications, create specific protocols in the event of a violation, and make a warranty claim if storage conditions exceed tolerances.
Overcoming Implementation challenges
Despite digital transformation and industry 4.0 approaching, companies still use obsolete and traditional systems in operations. Implementing IoT is meant to solve issues, but enterprises find it challenging to adopt it. Let’s see how enterprises can overcome this challenge:-
1. Unskilled Employees
Managing IoT devices involves rigorous preparations and training for warehouse staff and truck drivers. In such a deadline-driven industry, educating these new technologies is a very time-consuming process. Training the existing workforce can be a more suitable option to reduce costs.
With the micro-learning approach and accessibility of learning contents over their smartphones, learning anywhere can be ensured. Straightforward assessments and assigning short projects will help evaluate progress.
2. Increased challenges to data storage
Internet of Things (IoT) provides large data pools over the network giving great insights and information. The amount of information generated by smart devices increases, in return which increases data storage costs.
Business intelligence must integrate the data from IoT data pools, transforming this massive data pool into actionable insights. Analysts have to ensure that these data points are giving correct conclusions.
3. Security Threat
Testing the network’s security should be addressed before all processes are fully transitioned to connected platforms. Data processing and storage vulnerabilities may result in external attacks and leaks, increasing costs.
The Global Connected Industries Cybersecurity Survey conducted in 2019 emphasized that invasive IoT attacks have already blown many companies. The study found that only 17% of IoT devices used or manufactured by large companies have not experienced cyber attacks in the past 12 months.
There are several ways by which we can improve the security of IoT devices. Multi-level password protection can prevent devices from potential attacks and threats. We should give minimum connectivity to IoT devices for their operations. Constant monitoring of potential threats can reveal security loopholes.
IoT devices must have a private network. The private network will minimize their interaction with the network. Device management tools are worth investing in, as they can control devices’ access and prevent unauthorized access if any. IT department of the firm must ensure that devices connected are legitimate.
4. Internet Connectivity
IoT relies heavily on stable Internet connectivity. Since fleet drivers are moving from one location to another, there is not a consistent network. IoT devices consume a lot of bandwidth to operate smoothly. With internet coverage improving, these issues might resolve in future.
GlobeNewswire states that the size of the 5G-IoT industry would rise from 0.5 billion US dollars in 2020 to 15.7 billion US dollars in 2026, at a compound annual growth rate of 79.1% over the forecasted period.
Major drivers contribute to this growth, including a rise in data traffic due to a growing number of IoT devices across sectors and increased demand for high reliability.
Enterprises should resolve the above problems to adopt the IoT in their supply chain, which would increase the efficiency of their operations. They are higher forecasting accuracy, segmentation, and better delivery. To evaluate the extent of IoT’s benefits in supply chains, we can say that this is just the tip of the iceberg.