Supply Chain Innovation - Internet of Things (IoT)

March 22, 2016

The Internet of Things (IoT) will revolutionize your supply chain.

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The Internet of Things is already enabling supply chain transformations that improve efficiency, accuracy, and costs and there are many additional opportunities and benefits to come.

Key Takeaways

  • The Internet of Things will create new challenges and demands on your organization and your team will likely be tasked with delivering, sourcing, and maintaining the new breed of technology-enabled products and solutions
  • Supply chain organizations will need to acquire senior technology skill sets and credible leaders with the credibility to define technology strategies that resonate companywide. These skill-sets will likely need to reach far beyond those of your current team
  • If you oversee any part of your supply chain, from manufacturing to logistics, the Internet of Things should be front and center because organizations that leverage Internet of Things technologies in these early days can take a significant leap forward and gain a competitive edge

Just about everything in your warehouse will eventually be connected to The Internet of Things (IoT), the online network that connects and exchanges data between devices, vehicles, inventory, and even buildings. The Internet of Things is already enabling supply chain transformations that improve efficiency, accuracy, and costs and there are many additional opportunities and benefits to come. If you oversee any part of your supply chain, from manufacturing to logistics, the Internet of Things should be front and center because organizations that leverage Internet of Things technologies in these early days can take a significant leap forward and gain a competitive edge.

The Internet of Things has taken root in the supply chain somewhat organically but it will quickly become more and more engrained.

Intentional Internet of Things awareness and decision-making today will enable you to use it to your advantage as the capabilities grow. The Internet of Things will eventually change every aspect of the supply chain, but the concept is generally quite simple. It allows physical objects, including palettes, parts, packages and equipment to be embedded with sensors, so they can be continuously monitored, automatically tracked and remotely controlled across existing network infrastructure. The introduction of sensors and other electronics creates opportunities for unprecedented direct integration of the physical world into computer-based systems.

The initial supply chain benefits of Internet of Things technologies have been introduced in the form of improved monitoring of inventory and logistics processes. With these established Internet of Things technologies, you can track assets and control inventory automatically and much more comprehensively. Additionally, shipments can be traced through the manufacturing and transportation processes in real-time. Those benefits alone improve delivery accuracy and customer service. But the Internet of Things can also enable vast automation improvements in inventory flow, equipment monitoring, stock replenishment, inventory control, product expiration dates and maintenance. All in, the automation and process improvements can dramatically reduce inefficiencies and costs and, of course, those are the keys to preserving profit margins while remaining fiercely competitive.

When you consider the benefits already attainable, it’s not difficult to imagine the possibilities down the road. The greatest benefits will result as more IoT-enabled systems are linked together. The integrated data and digital communication will enable automatic adjustments within the supply chain. For example, based on real-time data from combined sources, software will automatically re-route certain items based on customer changes and proactively replenish inventory based on exact physical data and forecasted demand. Sales losses due to out-of-stock merchandise will occur much less frequently. When stock is low, IoT-based systems will be able to proactively place orders for restock of various items automatically. Even equipment in need of service will be flagged and diagnosed and maintenance scheduled automatically.

For multi-location warehouse networks the IoT-centered supply chain will automatically match available product across distribution facilities with current demand across multiple sales channels and automatically prescribe appropriate inventory levels for each facility. If no inventory is currently available, the systems will be able to check raw material availability and manufacturing capacity and possibly even pull an automatic production lever to request the production of more product for specific destinations.

The proliferation of IoT will drive the need for the redesign of many existing supply chain processes, structures, and systems.

The Internet of Things will create new challenges and demands on your organization and your team will likely be tasked with delivering, sourcing, and maintaining the new breed of technology-enabled products and solutions. Supply chain organizations will need to acquire senior technology skill sets and credible leaders with the credibility to define technology strategies that resonate companywide. These skill-sets will likely need to reach far beyond those of your current team.

The decisions you make about the partners you work with, the software and equipment you invest in and the people you hire today should be partially based on the Internet of Things opportunities they can help you realize both today and tomorrow.

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