New technologies and the Internet of Things have impacted many sectors, such as retail, manufacturing, healthcare, agriculture and more. Supply Chain though is an industry that is not discussed as much, but it faces many challenges that can be solved with the power of IoT.
The modern supply chain is becoming more complex day by day. Globalisation, tighter product margins, new regulations, security - whatever the challenge, successfully managing the global supply chain in 2018 is more complex than ever. For the most of the challenges and risks there are IoT solutions which are worthy to be discussed and explored further. A report by IDC and SAP predicts that IoT will lead to a 15% productivity increase in delivery and supply chain performance. Lets see some IoT applications below.
IoT Applications
Vehicle Monitoring
Vehicles face many challenges during driving to their destination that can be solved by an advanced telematic fleet management solution. This is usually a plug and play product that can provide real-time data about the vehicle performance and driver’s behaviour. The benefits of using a solution like this are both operational and financial. Due to the real time data, it is possible to provide periodic and real time recommendations to the drivers so they can change routes and behaviour when necessary. As a result, the company is able to optimise the fleet, reduce total idle time, save fuel and reduce accidents (by improving driving behaviour). In addition, companies can implement a reward or incentive policy to motivate drivers to achieve specific KPIs. Thanks to the data from the machine the company can do proactive maintenance so that the repair costs can go down and the hours of use per vehicle up. Besides, camera technology in the vehicle can be added, so that HD footage of any collision and driving incident is captured and transmitted within moments of it happening. This gives road transport operators increased protection against fraudulent insurance claims, false driving allegations and disputed liability.
Another challenge is that when a truck (or ship) carries perishable goods, such as food, chemicals and pharmaceutical drugs, in some cases they perish in transit. According to the Food and Agriculture Organisation of the United Nations up to one third of food perishes in transit every year. IoT sensors in the fridge of the vehicle or in a cabinet can exchange real-time data about performance, shocks, temperature, humidity, open-close status of the door and more helping relevant stakeholders to take better decisions and proactively avoid surprises. Similar sensors can be used to monitor the conditions of other products such as medicines, jewellery and others.
Smart reusable pallets
Pallets, one of the oldest links in the supply chain, are ready to deliver far more than products. Traditional pallets are wooden, with a limited lifetime and important safety issues. The new durable, reusable pallets made from composite materials can address many of these challenges, but their high cost and the frequent loss are big obstacles for stimulating the widespread adoption of these reusable pallets.
Considering these problems, imagine if you can track your pallets and collect valuable real-time data about their location, temperature, humidity, shocks, arrival/departure and more. This solution already exists and the connected pallet can make the ownership or renting of a reusable connected pallet very worthwhile. Furthermore, the data that can be collected can give many insights for the manufacturer, the logistics company, the retailer, the insurer and even for the regulators. As a result, new services and business models can be created optimising operations and bringing additional revenues to the right stakeholders. The pallet as a service which transforms the capital expenditures (CAPEX) of buying a pallet to operational expenditures (OPEX) is able to play a key factor to the modern supply chain, particularly in conjunction with RFID developments.
Smart Shipping
In the shipping it is already happening to monitor the location of boats and containers, but now at low cost it is also possible to monitor the condition of the container, like the temperature, humidity, shocks, weights (to measure losses) and more. Intelligent real-time streaming cameras can be added in containers with high value items with high impact on insurance and transparency. As a result, the companies will augment their ability to confirm the condition of a product as it is in-transit, instead of having to rely on testing upon arrival creating delays and disappointing surprises.
Smart packaging
The Internet of Things has come also to packaging. Even if it is still early days we see more and more connected bottles or cartons of food, beverage, pharma and more. The connected packages can give useful information to consumers, retailers and manufacturers and help them interact. For example, information about the condition of the product and its origin can increase transparency and trust between the consumer and the brand. Furthermore, the data that retailers and manufacturers can collect is useful to help them improve their operations, the development of new products and drive better marketing campaigns based on consumer’s behaviour.
Thanks to the progress of technology and the very low cost of sensors and connectivity it is possible to monitor even folders of documents (useful when someone sends a very confidential letter for example). These sensors could monitor not only the location, but also the open-close status of the folder in real time.
Connected workers
Connecting the fleet, the pallets and the boxes is great, but something is missing. What about the drivers and the people who do the last mile delivery? Nowadays, there are plenty options to connect employees tracking different features for different purposes, such as safety, productivity and transparency. For example, measuring worker biometrics/stress/fatigue, broadcasting safety-related data from and to employees using IoT devices can both reduce the number of accidents and increase productivity. Another example, measuring real-time location of the workers and drivers can help optimise logistics by informing them when and where to go instantly, but also can increase transparency among the company, the employee and the client since everything is monitored. Large corporates already use such sensors (e.g. Amazon, DHL) with useful outcomes. However, all actors should be aware and constantly monitor any privacy issues particularly given recent incidents.
Why are all these IoT solutions possible now?
Power of connectivity and sensors
The reasons are many but amongst others, the evolution of new connectivity networks and the decrease of connectivity cost make it possible to develop a fully connected supply chain. The new Low Power Wider Area Networks (LPWAN) such as NB-IoT and LTE-M offer longer battery life, longer and deeper coverage at a very low cost. We can expect a future with a mixed use of bluetooth, LPWAN, Satellite and 2G (not for long), 3G and 4G connectivity. In addition, the cost of sensors has been decreasing dramatically making it affordable to add sensors in almost everything as well as edge computing power has become significant in offering real-time analytics. Needless to say, RFID is also playing an important part of this revolution, expecting to see more and more companies start using it throughout their supply chain.
Future solutions
Autonomous Vehicles - There are already some interesting developments that could have an impact much sooner than people think. One example was the trial of unmanned delivery vehicles in Greenwich, London by Ocado and Oxbotica which delivered to over one hundred residential customers. Technology like this could become widely adopted for final-mile deliveries, but also for longer distance work. There should be significant cost savings from autonomous vehicles. Morgan Stanley estimates the potential savings to the US freight transport industry at $168 billion annually from improved fuel consumption, reduced labour costs, improved productivity and reduced accidents. Keep an eye on WISE-ACT outputs for relevant developments across Europe. WISE-ACT is a network of experts exploring the wider impacts of such innovative technologies.
Drones (air and ground) - Drones have been touted as the next big thing for long time, despite space and privacy regulations severely limiting their scope. Already some companies (e.g., 7-Eleven, Wal Mart) test them for last-mile delivery and even in stores. Drones can bring significant cost savings and speed, but also can serve consumers in remote areas where access by roads or sea is not possible.
Additional benefits from using IoT in Supply Chain
Data – By connecting all these vehicles, assets and people the amount of data that is collected is significant and the companies which will be able to integrate the different datasets and analyse them creating valuable insights will be these that will have a clear competitive advantage. All this data can also help companies create new business models selling potentially new services and insights to its B2B clients or partners. In this case, the challenge is to find and recruit the right number of Data Scientists and create a data driven culture within the organisation.
Insurance – Monitoring and measuring everything in real time can reduce risks and uncertainty in the supply chain helping insurers reduce premiums and incentivise clients to use the insured assets properly. Indeed, we already see an evolution in fleet management insurance due to the use of telematics. Researches show that access to 'In-Vehicle data' can save warranty claim costs by 25% and also bring down recall costs by 35%. In addition, there are companies that even use cameras to capture the moment of accident, robbery or hazard in real time. The total insurance industry of supply chain can be absolutely revolutionised.
Customer Satisfaction & Product Development – Being able to better manage the supply chain and reduce costs, risks and uncertainty usually mean that the manufacturer and retailer are able to provide the right product in the right place at the right time, regardless of channel. As a result, the customer satisfaction and loyalty can reach high levels. In addition, especially in the case of products with connected packaging, the data which can be collected and analysed (anonymously) is so valuable that will help brands and retailers offer customised services or targeted discounts. Furthermore, by better understanding how their products are used hopefully they can develop new products satisfying new needs of not only large, but also niche market segments. Needless to say, organisations need to take all necessary measures to protect the privacy and the data of their customers.
Compliance & fraud – Apart from the operational and commercial benefits, higher scores of compliance with national and international regulations can be achieved as well as fewer penalties for the companies. This means that the quality of products and services for the consumers can be improved since there will not be enough space for fraud, corruption or misleading information. Especially if we consider the benefits of using blockchain and edge computing in the supply chain, we can be optimistic about a more reliable and transparent supply chain.
Sustainability - In many cases using IoT helps the company monitor, analyse and manage the carbon footprint across the supply chain, including in places or at levels of detail not possible before. Sustainability often goes hand-in-hand with efficiency, which is usually translated into cost savings. For instance, by optimising routes and loads, implementing reverse logistics, reducing waste of products (like food), improving driving behaviour. So IoT can promote lean logistics principles, eliminating any waste of resources leading not only to lower costs, but also to more green supply chains.
Conclusion
Internet of Things can enable many valuable applications in any aspect of the global supply chain offering. However, saying this doesn’t mean that a company has to implement all of these solutions at once or that every problem will be magically solved. Problems like data privacy, silos within organisations, fear of change, lack of skills or experience are probable to occur and each company has to be proactive to deal with each of these. Some tips for the companies which are planning to start their IoT journey:
1) Be clear on what problems to solve first or what to achieve. Priotisation is key.
2) Consider the cost of implementing a solution in combination with the short and long-term benefits. The right balance is key!
3) Start small by having trials in few vehicles/few employees/few pallets and when the results are positive and there is support from all the different stakeholders then deploy the solution at scale.
4) Train all supply chain actors, including own employees, suppliers and customers. However, do not only train the employees about how to use the technology, but also the managers about how to manage their resources, lead and motivate their teams aiming to achieve the right balance between human and technology.
5) Lead the cultural change of their workers, managers and partners who will be affected by these IoT implementations. Otherwise, it is very easy for these projects to fail just because people do not want to use them.
You can read more details about these and other tips about IoT and Data teams in my previous article: https://www.linkedin.com/pulse/6-1-lessons-internet-things-iot-data-teams-forget-spiliopoulos-iot-/
The human factor really matters and this is where many IoT projects fail. There is an increasing need for collaboration across the supply chain. That is why apart from the technological and economical aspect, the companies need to invest time and resources to enable the transformation of the human mindset and cultivate a more collaborative approach.
For IoT to be totally effective, all members of one’s global supply chain must be connected. That may take a while, but as technologies like blockchain, LPWAN and edge computing continue to take form, there is so much further we can go to make the supply chain even more efficient and creative than ever before.
Q: What are your thoughts about the future of Connected Supply Chain?
Thank you all for reading the article. Feel free to contact me if you want to discuss further the above mentioned IoT applications in Supply Chain or other IoT subjects.