Managing the supply chain ranks among the most challenging components in the business world. It does no one any good for a company to produce good products if they cannot get those products to customers efficiently. Businesses can have great plans, but if their employees have difficulty managing production and distribution, nobody benefits. Businesses that have supply-related logistical problems stand to benefit tremendously from adding IoT (Internet of Things) technology to their production systems.
According to Andrew Meola of Business Insider,
“Delivery company DHL and tech giant Cisco estimated in 2015 that IoT technologies such as asset tracking solutions could have an impact of more than $1.9 trillion in the supply chain and logistics sector.” (“How IoT Logistics Will Revolutionize Supply Chain Management,” Dec. 21, 2016).
Whether managing their own delivery systems, or outsourcing them to the a third party, businesses will benefit tremendously as more IoT technology gets integrated into supply chain systems.
How does it work and how does it help?
Radio Frequency Identification (RFID) and Low Power Wide Area Networks (LPWANs) technologies provide identity, location and other tracking information, enabling businesses to track inventory and products from the manufacturing plant to the retailer. This allows detailed visibility into shipping data such as time of arrival and temperature control which increase efficiency and maintain higher product quality.
Writing for Inbound Logistics, Udaya Shankar (Internet of Things, V.P.) contends that, “Combining real-time sensor data with environmental data will move the supply chain process from a reactive mode to a proactive one by offering information well before any activity happens.” (“How the Internet of Things Impacts Supply Chains”) For almost any business, pro-active iteration will lead to lean production and management in comparison to a reaction based approach that entails waiting for a problem to arise first.
Specific Use Cases:
- IoT technology will allow manufacturers to discover supply chain problems sooner and correct them faster, reducing the cost of waste or damage to product;
- Optimizing delivery routes and monitoring traffic conditions will reduce fuel costs;
- Ensuring temperature stability in food delivery will reduce the amount of food that perishes during delivery;
- Automated supply inventory management will reduce storage costs and limit production stoppages;
- Embedded sensors will provide greater visibility into customer behavior and help guide plans for future development;
- Utilizing near-field communication (NFC) tags, based on RFID standards, workers in manufacturing plants will use mobile devices as readers for the NFC tags, increasing efficiency;
- Barcodes that currently require manual scanning will be replaced with sensors that record data automatically, reducing labor demands and increasing accuracy;
- Bluetooth tags and in-store beacons allow customer and product tracking in smaller areas, while initiating well-timed marketing messages to customers.
Target, for example, has already begun to use beacons in stores to guide customers to the products they seek, and to make real-time special offers. (“Target Launches Beacon Test In 50 Stores, Will Expand Nationwide Later This Year,” Tech Crunch, Aug. 8, 2015).
Amazon has begun to open various brick-and-mortar stores, utilizing IoT technology to eliminate checkout cashiers and to make the shopping experience more seamless for customers (“Amazon’s Ambitions Unboxed: Stores for Furniture, Appliances and More,” New York Times, March 25, 2017).
Supply to Service
One potential outgrowth of IoT implementation in supply chain is that current product providers will add more services. The increased amount of information available will allow providers to extend their relationship with customers, and in most cases increase revenue, by offering services related to their products. According to Noha Tohamy (research V.P. at Gartner, a leading research and advisory firm in the IT sector), an industrial equipment manufacturer could redefine its value proposition from exclusively selling physical products to offering customers a complete solution that includes software combined with services that support their products. (“Five Ways the Internet of Things Will Benefit the Supply Chain,” April 9, 2015)
By adding services, such as monitoring and maintenance, suppliers will continue to reap benefits from their relationship with customers beyond delivery. This will increase customer loyalty, as customers see the benefit of the additional service.
Communication and Messaging
What this means for the provider is that they will need the best forms of communication, through messaging systems like UnifiedInbox. Their customers will be relying on them to closely and accurately monitor products and to provide excellent advice on future steps. Access to the data and seamless ways of B2B communication will make the entire supply chain more efficient and prove beneficial for all stakeholders.
About the Author
Richard Meyers is a former high school teacher in the SF Bay Area who has studied business and technology at Stanford and UC-Berkeley. He has a single-digit handicap in golf and is passionate about cooking, wine and rock-n-roll.