IoT and the Digital Supply Chain

From wearables to connected cars to home automation systems, it’s become impossible to go even a single day without interacting with the Internet of Things, or IoT. But IoT isn’t just for consumers. One of the biggest industries that IoT is impacting is supply chain. New IoT-powered tools are enabling a digital supply chain, in which shipments around the world are tracked, monitored, and analyzed in real time. In this new landscape, it is vital for supply chain managers to familiarize themselves with IoT and the new IoT-powered solutions that are paving the way for a digital supply chain.

So What is IoT Anyway?

There’s a lot of hype about IoT, but it isn’t always clear exactly what people mean when they refer to Internet of Things technologies. At a high level, IoT refers to any system in which distributed sensors monitor goods in the physical world and share that data via a digital network. These sensors can monitor anything from location to blood pressure to air quality -- if you can measure it, you can use it in an IoT system. For example, an IoT home temperature monitoring system enables homeowners to get real-time data from thermometers in their house sent directly to a smart phone app or website. Similarly, a wearable IoT fitness monitor might provide heart rate data, steps taken, or miles traveled.

And there’s reality behind the hype -- by 2020, Gartner analysts forecast that over 20 billion IoT objects will be in use. This will include not just consumer products, but also commercial systems such as industrial equipment monitoring tools, sensor-driven transportation automation, and of course digital supply chain management solutions.

An IoT-Powered Digital Supply Chain

When it comes to supply chain, an IoT system involves distributed sensors tracking location and condition of in-transit goods and sending that data to the cloud in real time. Sensors can track GPS coordinates, temperature, humidity, shock, and more, and managers can access and interact with that data instantly on an online platform, giving them non-stop awareness of their shipments’ status. Is a shipment in the wrong location, or set to the wrong temperature? A digital supply chain means managers have access to that important information right away, and can take action to solve the problem. For example, IoT trackers can send a real-time alert if temperature-sensitive pharmaceutical products experience harmful temperatures, enabling the shipper to fix the issue before the product is damaged. Armed with this real-time information, a manager can potentially save millions of dollars in damaged or delayed goods.

But it’s not just about solving immediate problems in real time. IoT gives companies access to previously invisible data regarding the location and condition of their goods, and analysis of these large data sets can provide valuable, actionable insights on a large scale. For example, after analysing several months’ worth of shipments, a manager may discover that certain routes are significantly more likely to experience delays or harmful mishandling. Simply by changing the route, the manager can resolve the issue going forward and save time and money with future shipments. Insights like this can have a lasting impact on a company’s bottom line, as they enable managers not just to solve the issue in real-time, but also to understand and eliminate the root cause of the problem.

The Benefits of IoT

It’s no surprise that more information means less headache for managers, and less money lost for manufacturers. But what are some of the specific ways in which IoT is benefiting supply chain today?

1. Increasing Visibility

Any improvement to the efficiency and reliability of a supply chain starts with visibility, and IoT tools help companies gain and maintain visibility over every part of their supply chain. For many global supply chains, a shipment may last weeks or even months. Those in-transit goods often represent a significant unknown variable, leading to widespread inefficiencies and waste. With no way of knowing whether a key shipment will arrive on time and unharmed, manufacturers may be forced to rely on large amounts of safety stock and/or expensive last-minute replacement shipments. But with the incorporation of IoT tools, managers can shed light on the dark spots in their supply chains, gaining insight into vital information regarding their goods and processes.

2. Improving Efficiency

With greater visibility, managers have the information they need to reduce waste and excess cost across the supply chain. In the past, managers have been limited to using loggers and other passive tools that only provide data after the fact, with no context or real-time notifications. As a result, companies would often have no way to avoid delays or damage to goods, and they would be forced to make do with damaged product, pay for late fees, and/or spend millions of dollars on safety stock. An IoT-powered digital supply chain provides real-time location and condition data straight from the cloud, making it possible to prevent problems before they occur and avoid this unnecessary waste. Managers can predict accurate arrival times, expedite replacements for damaged or delayed goods, and identify problems in their supply chain for targeted optimization, enabling them to reduce waste levels, limit overhead costs, and run the supply chain lean.

Ultimately, reducing waste and improving efficiency means fewer unpleasant surprises for the supply chain manager. Without real-time visibility, the only way to discover bad news such as a late or damaged shipment is an angry customer call, or invoices left unpaid. That’s a recipe for a long day of headaches and back-and-forth phone calls. But IoT is changing everything. Managers are gaining insight into their in-transit goods and finding about problems as soon as they occur. With an IoT-powered digital supply chain, managers can refocus on preventative action and improving inefficiencies on a large scale -- not putting out fires.

3. Improving Customer Experience

As companies such as Uber and Amazon set the bar for rapid, on-demand consumer services, customer expectations are rising in every industry. Consumers are demanding ever greater precision and quality when they purchase products, and many shippers are struggling to keep up. It is only through the development of an IoT-powered digital supply chain that manufacturers are able to compete in this new environment. Armed with real-time insights about in-transit goods, managers can warn their customers in advance if a product will arrive early, late, or damaged in any way. In some cases, managers can even use that advance warning to resolve the problem before the customer even notices anything was amiss. For example, a container set to the wrong temperature can be reset as soon as an excursion alert is received, saving both the manufacturer and the customer a lot of needless headache. IoT tools are giving managers the real-time insights they need to deliver a top-notch experience to their customers, enabling greater customer satisfaction with less hassle all around.

4. Enabling Data-Driven Decision Making

Finally, IoT tools give manufacturers access to enormous, previously invisible data sets. That data is useful not just because it empowers supply chain managers to solve problems in real time, but also because it provides the foundation for broad optimization. With insight into the context and root cause of problems such as damages and delays, managers can make informed decisions that improve not just a single shipment, but an entire supply chain operation. For example, a manager may notice patterns in damaged shipments that identify a certain carrier or route as particularly damage-prone. By leveraging that insight, the company can change the route or replace the carrier, eliminating the problem in the future. IoT provides data that makes it possible for companies to optimize the supply chain from end to end, and make decisions driven by data, not guesses.

New Technologies Enable the IoT Supply Chain

The benefits of an IoT-powered supply chain are clear. But why now? There are a few key technology and infrastructure advances that have joined forces to make the digital supply chain a reality.

1. Big Data & Analytics

IoT tools generate a lot of data. Most manufacturers are not software companies; they do not specialize in data management, and they simply do not have the resources in-house to deal with the kinds of data that IoT systems provide. However, the proliferation of cloud-based solutions that offer SaaS data storage and management models has made it possible for the little guys to get a taste of Big Data. With cloud-based data tools, anyone can store, share, and analyze large amounts of data without needing to invest significantly into their own internal IT infrastructure.

2. Cellular Coverage

An IoT system is only as useful as the network through which it communicates. The global cellular network is the backbone of many IoT systems, providing an unprecedented level of global coverage and reliability. Thanks to the popularity of mobile phones, cellular carriers have developed extensive network infrastructure that enables service all around the world. According to recent reports, over 90% of the world’s populated areas are covered by the cellular network. As a result, IoT systems can rely on the cellular network for almost completely uninterrupted global coverage, without needing to invest in expensive custom infrastructure.

3. Low-Cost, Long-Lasting Trackers

The final piece of the puzzle is the IoT device itself. Historically, always-connected tracking devices have been limited due to short battery lifetime and prohibitive costs. But today, advances in battery technology and tracker firmware have made it possible for trackers to last several weeks or even months on a single charge. Since many supply chains have routes that last up to several months, a long-lasting tracker is key to enabling an effective digital supply chain.

The Future of the Digital Supply Chain

All this is only the beginning. Manufacturers are just starting to realize the potential of leveraging the enormous amounts of data that an IoT-powered digital supply chain can generate. As IoT tools become ever more widespread and the available data grows more extensive, companies will be able to apply advanced predictive analysis tools and turn those data sets into useful, actionable insights. A predictive analytics package could help managers not just draw patterns in existing data, but go one step further to predict future problems and suggest preventative actions based on historical data.

In addition, technological advances in cellular networks and long-lasting tracker technology promise to further improve IoT-powered digital supply chain solutions, making them even more effective and efficient. For example, developments in battery technology will further increase the lifetime of cellular-connected trackers, while developments in cellular chips will continue to bring down the cost of these IoT solutions.

The IoT foundation for all these future improvements is already in place today. IoT is the framework on which the digital supply chain of the future will be built, and here at Tive, we’re excited to be a part of this IoT revolution. For more information on how Tive can help you build an IoT-powered digital supply chain, request a demo today.