The news headlines bombard us with the new uses of the IoT — driverless cars, drone delivery, smart mattresses, what not. What makes these examples more impressive is the presence of a tangible product to show the readers. In this article we will talk about the contribution of IoT in the supply chain — all those processes happening behind the curtain of the product release — on the shop floor, on the road, in the manager’s office.
A supply chain is the sequence of activities leading the product from the idea to the customer. We will look at the impact of IoT on each major stage of this journey.
Manufacturing
The manufacturing is going lean — IoT makes it even leaner. All equipment in the shop premises gets gradually stuffed with sensors — to measure internal temperature and prevent overheating, to monitor wear and avoid idle time, to check end-product quality and minimize defective produce. IoT perfectly aligns with the concept of kaizen or continuous improvement — real-time analytics enables instant issue detection and initiation of targeted corrective actions.
Toyota uses IoT to increase parts traceability and response time to quality issues. If the field issue occurred, they would be able to trace the faulty item back to its manufacturing condition and see if any conditions of the manufacturing process could have led to poor quality. The company also installs sensors on the shop floor equipment to build its profile and create an optimal maintenance cycle that justifies the frequency of servicing operations.
Operations
Operations management determines how efficient a company’s processes are and embraces products, quality, and service. To do its job well, operations need to perform a lot of analyses, detect the stumbling blocks, and streamline the inefficiencies. IoT offers tons of real-time data to drive tactical decisions in the organization; moreover, the analytical system can initiate the actions to fix the issues without human participation.
Boeing has deployed a proprietary IoT supply chain tool on all of its 50 assembly plants. The ESI (enterprise sensor integration) software platform is a cloud-based solution aggregating data from numerous sensor technologies that track, monitor, and control assets and workflow processes. The system combines data from bar codes, RFID, Wi-Fi, GPS tags, scanners, and ultra-wideband wireless systems into a single platform where AI algorithms arrive at business insights on the intersection of these sources.
Procurement
IoT in procurement enables better visibility into the company spend analysis, continuous monitoring of the movement of goods within the supply chain, and generation of more accurate and dynamically updated consumers consumption patterns. Having predictable order schedules facilitates negotiations with suppliers and allows the latter to plan their manufacturing and deliveries more consistently.
P&G launched a smart app for its Oral B toothbrushes in 2014. It tracked brushing habits and offered personalized oral care tips to customers. Now, P&G is the leading partner on the Amazon Dash buttons allowing consumers to order select P&G products from Amazon in a convenient location (e.g. a button to order Tide detergent on the washing machine). These and other similar efforts allow P&G to learn more about the consumers, add value to their everyday chores while collecting important insights on their product use patterns which tune the company’s supply and demand planning.
Logistics
Companies keep building their connected fleets with GPS, GPRS, and LPWAN technologies. Shipping containers, delivery trucks, service vans — all get a tracker to monitor location, fuel consumption, driver behavior, etc. with the purpose of optimizing costs, finding new business opportunities, and increasing customer satisfaction
Maersk in cooperation with Ericsson has been implementing the Remote Container Management (RCM) system for around five years. 300,000 containers spread across 343 ports in 121 countries carry 15% of the world’s annual GDP — analyzing vessel operation, fuel consumption, and electric conditions at such scale had a significant effect on the bottom line. In a pilot project, Maersk monitored the set point temperature of their refrigerated containers. When the temperatures deviated outside the limits predefined in the system, knowing the commodity in the container the company could evaluate the extent of the problem and take actions to avoid damage to the cargo. Over 15 weeks Maersk managed to fix 180 cases that could become customer claims at a later stage.
Inventory
Active and passive RFID tags are one of the older but still trending and efficient technologies in optimizing inventory and warehouse management. Near-field communication tags (NFC) go further and allow personnel to use their cell phones as tag readers eliminating another barrier. Trackers relying on LPWAN technologies (low-power wide-area networks) allow companies to tracker their good throughout the supply chain regardless of the cellular coverage.
Walmart was an early adopter of RFID tags back in 2003. The retailer reported 16 percent decrease in out-of-stock inventory owing to this technology that enabled the creation of “smart shelves” automatically reporting staff about low product quantity. Currently, Walmart owns the biggest private cloud combining and analyzing 200 streams of data at a rate of 2.5 petabytes per hour. When an item is scanned at the checkout, the system calculates inventory and adjusts the forecasted replenishment time.
***
The IoT-enabled devices and technologies keep evolving in 2018. However, it’s no the cutting-edge technology, but a more relevant and insightful approach to analyzing the data that distinguishes the best from good. At the end of the day, what’s the sense of collecting 40 petabytes of recent transactional data (like Walmart does) if you can’t take advantage of it?