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How Does the Internet of Things Influence the Supply Chain?

Michael Wilson | May 31, 2017

When most people think about the Internet of Things (IoT), they envision consumer-level products — usually wearable fitness devices like Fitbits — rather than an array of powerful ...

When most people think about the Internet of Things (IoT), they envision consumer-level products — usually wearable fitness devices like Fitbits — rather than an array of powerful tools that is transforming industries from manufacturing to healthcare.

The Internet of Things can be broadly described as a networked cluster of interfaced computing devices and sensors that can transmit data from machine to machine without the necessity of human input. Take the simple example of a fitness wearable — the sensors gather biometric data such as steps, heart rate, and sleep activity and automatically input it into a mobile app for later viewing by the user. No manual input is required.

So, how does the IoT concept translate to the supply chain sector? In tandem with cloud computing, IoT has the potential to revolutionize the industry by adding massive efficiency to every step of the chain through richer data and stronger intelligence across the network.

For example, sensors can be attached to various devices and carriers to create digital endpoints at each step of the chain. The network then yields real-time data about inventories, logistics, and fleet management. Managers can use connected tablet devices to get a bird's eye view of the entire supply chain operation from manufacturer to warehouse to end-user.

By creating a network of IoT sensors across the supply chain, managers will know everything from retail purchase rates to shipment locations to product temperatures and can be empowered to make quick decisions as data changes to avoid delays and spoilage.

The IoT will usher in the era of the smart warehouse — where workers use hands-free wearables to access real-time information from anywhere in a warehouse without being chained to a desk. Radio-frequency identification (RFID) tags allow managers to “see” the precise location and logistics of any stored item. loT-driven smart warehouses save time, money, and excess busy work.

Because IoT devices rely on cloud computing, data can be shared instantly with laptops, handheld devices, and vehicles across every link in the chain. No longer can any worker claim to be “out of the loop.” IoT tablets and mobiles will send instant notifications to all involved at every milestone in the chain as well.

By leveraging greater efficiencies in fleet management, IoT systems will empower supply-chain managers to improve their carbon footprint by saving time and miles across all routes and modes of transportation. Enhanced efficiency also means less emissions from your fleet. In fact, IoT devices can even identify potential trouble spots when it comes to pollution.

In addition to gathering data, IoT devices work “hand-in-hand” with already existing analysis software to help managers make sense of the tidal wave of gigabytes that cross their system every day. Data minus intelligent analysis is just white noise. IoT devices will provide analysis programs with more relevant data resulting in more agile solutions.

The break-neck adoption of IoT across all commercial sectors is blossoming – a recent study predicted more than half of all newly developed business processes will include IoT by 2020. Another study by Zebra Technologies shows that 7 out of 10 supply chain decision makers aim to accelerate their use of technology to create smart warehouses by 2020. Furthermore, IDC predicts that digitally connected processes will drive 15% productivity improvements for manufacturing supply chains” by 2018.

A recent white paper commissioned by the American Production and Inventory Control Society paints a rosy picture for the marriage of IoT and supply chain management:

“For supply chain, from the manufacturer to the end user, the Internet of Things means richer data and deeper intelligence for all parties in a supply network. Supply Chain Management will continue utilizing these advanced technologies to improve factory workflow, increase material tracking, and optimize distribution to maximize revenues.”

The Internet of Things will likely fuel a positive disruption across all consumer and industrial sectors going forward much in the same way that the actual Internet did in the early 1990’s. Supply chain managers must hop on the train or be left at the station.

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