The Benefits of the Internet of Things for the Supply Chain (and 5 Use Cases)
A growing number of supply chain leaders are turning to the Internet of Things (IoT) as a way to drive efficiency, transparency and sustainability. Procura consultant Siyi Xu outlines five use cases for how the Internet of Things can be applied within the supply chain function, and the benefits of the rapidly evolving technology.
According to research by Gartner, the global market for Internet of Things solutions is expected to grow to €1.5 trillion by 2025.
Growth is driven by the abundance of benefits that technology can bring to industries, ecosystems, and organizations; McKinsey & Company, for example, believes that IoT use cases could have an economic impact of up to €10 trillion by 2025.
IoT is defined as “a network of physical devices with embedded electronics, software, sensors, actuators, and connectivity that allows devices to connect and exchange data using cloud computing.” Technology creates opportunities for more direct integration of the physical world into computer systems.
Five use cases for how IoT can advance the supply chain
Collecting data intelligence by analyzing patterns over time allows for accurate predictions and intervention if malfunctions occur. This provides inventory planners, production and purchasing managers with better information and forecasting accuracy when making executive decisions about purchasing, manufacturing and selling products.
For example, ACE Hardware, a hardware retailer, uses IoT solutions to track product orders and delivery status. “IoT sensors enable real-time point-of-sale analytics, allowing ACE to replenish inventory systems faster and reduce inventory holding costs.”
Shipment and asset tracking
IoT systems such as RFID (Radio Frequency Identification) and global SIMs provide real-time access to supply chain managers to locate a shipment or asset, enabling them to use real-time data to detect, locate and determine the status of an order or existing asset for: Instead of manually recording data or using traditional inventory devices, managers can now use software to automatically collect data and receive real-time status updates on all assets.
For example, for freight, FedEx “uses cloud platforms fed by fleet data as well as traffic models, weather reports and other sources to map the most efficient routes for items to be distributed through their network.” This cloud application improves the accuracy of decision making, the accuracy of delivery forecasts and the speed of risk reduction.
An example of asset tracking is Deutsche Post DHL Group, a leading logistics company, and Sigfox, a leading IoT service provider, collaborating on a project to optimize IoT processes for the supply chain of DHL’s German parcel network. IoT trackers have enabled the digitalized management and location of rollers used to transport parcels.
This has not only increased the transparency of DHL’s supply chain, but also contributed to the quality of customer service and operational cost savings.
Maintenance and repair
IoT-based solutions can collect data such as temperature, humidity and vehicle malfunctions. This can be used by cloud computing applications to monitor operations and visibility in real-time. Photographic tools can scan machine components, such as blades, to send alerts for predictive maintenance. Manufacturing facilities that integrate sensor networks into machines can therefore increase uptime, reduce operating costs and improve overall service quality.
For example, GE Digital has partnered with FogHorn, a leading developer of edge computing AI software for the IoT, which has developed a solution using its sophisticated event processor to capture raw, streaming vehicle data combined with RFID, operating parts and to convert the process into quality specifications.
By analyzing the large amount of RIFD sensor data produced during the production cycle, GE detects early defects and can develop intelligent, unscheduled maintenance. This helped GE significantly improve profitability in its manufacturing operations.
In addition, IoT-based solutions can also help product managers monitor and control the quality of raw materials and production. IoT scanners can scan raw materials for attributes such as paint color or fabric composition to confirm quality and accuracy before they are used for finished products.
For example, Daihen Corporation, an industrial electronics and power company, automates the quality control of its industrial transformers by using external IoT solutions to ingest and aggregate multi-protocol streaming data collected from various assets and use real-time analytics based on the cleaned data. to determine pass/fail inspection and meet the industry’s high quality standard for electrical transformers. This effectively reduced production time and labor costs to maintain product quality.
Environmental sensors allow supply chain managers to monitor shipping conditions and proactively respond to changes. IoT solutions can collect data on temperature, pressure, humidity and other factors inside vehicles that could compromise product integrity and trigger automatic condition adjustments.
For example, software development vendors such as ScienceSoft use Amazon’s AWS Cloud as a server. The data collected from the sensors is then transmitted to the cloud via GRPS. This IoT solution enables temperature and humidity monitoring of cargo, which is then fed into customers’ existing vehicle management systems.
Benefits of implementing the Internet of Things
Implementing IoT solutions in supply chain management is a good way for retailers to learn more about their products, customers and demand and build strategies accordingly. The data collected throughout the product cycle can help them better understand the market and segment products based on the target audience.
Intelligent route planning tools and IoT tracking technologies increase overall supply chain speed IX by shortening the scope of feedback loops, reducing decision-making time and proactively mitigating delay risks.
Companies with a cloud-based IoT system can solve problems faster by giving access and sharing relevant data to all parties involved in the supply chain lifecycle. This data helps different stakeholders at different stages of the supply chain to formulate strategies and scenarios according to their roles and needs. This effectively reduces the impact of human error during data collection and improves overall accuracy over time.
IoT solutions can leverage the influence of technology and machine intelligence to go beyond the limitations of human capabilities and identify unanticipated problems or bottlenecks in the supply chain, such as resource leaks, inefficiencies, and machine failure. These connected systems then provide accurate and real-time tracking information and alert notification to various stages of the supply chain.
This not only enables IoT as a starting point for full warehouse automation without human supervision, ix but increases business agility and adaptability to an uncertain global market.
By improving a business’s ability to mitigate risk, IoT solutions can reduce the cost of unplanned downtime and save production time from scheduled maintenance by monitoring a range of data and sending instant alerts with alerts if something goes wrong. Furthermore, historical data collected from IoT sensors can be used by analytics tools to predict future behavior, leading to fewer unplanned outages, increased production efficiency and capacity.
In a smart supply chain, IoT sensors can improve corporate sustainability by updating managers with relevant information about how energy and resources are being used in their supply chain and product cycle. By providing better information and increasing awareness, IoT solutions allow managers to implement green strategies at different stages and integrate large-scale initiatives such as proactively choosing renewable sources, electric vehicles and energy-efficient spaces.