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IoT in Logistics: Barriers to collaboration

What are the barriers to collaboration? This question was a response from Mr. Jim Katzenberger to my previous IoT in Logistics blog. Keeping in mind the context is IoT in Logistics, here are the key barriers to collaboration I see: vested interests, cost and differentiation.

Vested interests

Investments in logistics are driven by the constant demand for better, faster and cheaper supply chains. In logistics, every link in the supply chain is an investment and a potential barrier. There are many links in the complex global network of chains.

A key factor in the success of IoT was catering to “i”: the individual’s needs first. Ignoring the needs of the individuals who work in supply chains is a barrier to collaboration. IoT now needs to extend its value to the individual as a wage earner (drivers, farm workers, factory workers, equipment owners).

In supply chains, there is much talk about visibility, data sharing and transparency. Remember the death of a thousand workers in a Bangladesh factory? The stakeholder enterprises had no visibility to their supply chains? IoT in Logistics would address that issue.

Enterprises outsource logistics to 3PLs to get around internal and external barriers to lower costs. In outsourced logistics, visibility is provided by collecting, entering and transmitting data by many to many partners in the network. The process is expensive, slow and error prone. IoT automates data capture to deliver visibility better, faster and cheaper at digital speed. IoT enabled third-party information logistics services provide new levels and range of visibility not possible before.

To overcome vested interests, the first step is to break free of bondage from chains.

IoTiL deployments

IoTiL deployments

IoT deployment strategies in logistics: integrate with legacy systems, reinvent the wheel or go digital. IoT is digital in nature. IoT driven transformations are a combination of integration and differentiation by reinvention. For example in the auto industry, IoT solutions can improve the internal combustion engine, eliminate the internal combustion engine (TESLA) or design the car as another smartphone-enabled service that can be summoned to transport you to where you want to go.

Costs

Most enterprises and entrepreneurs struggle to figure out the monetization of IoT in Logistics. Logistics costs and infrastructure vary from country to country. Collaboration without understanding costs will take its toll. Knowing what the cost should be and managing it is smarter than analyzing spend after the fact.

Unlike social media, monetization should not be an afterthought in logistics. There is no free shipping. Someone has to pay or supply chains break and service providers go out of business. The people who get hurt most are at the bottom of the pyramid. An Uber driver’s view: “As long as Uber provides me the monetary incentive, I will be an Uber driver.” From a customer’s perspective, as long as Uber or Lyft is cheaper and more convenient, they will be customers.

Target is cracking down on suppliers as part of a multi-billion dollar overhaul to speed up its supply chain and compete with rivals. Where will the billions be saved? Collaborative cost take-downs are a smarter way to reduce costs. Suppliers can bring innovation to the company if it is not used against them.

Gross inefficiencies exist in every link in supply chains and systems supporting them. Wasteful friction occurs between the links. If it cannot be improved, should it be eliminated? IoT solutions can deliver value on first use. In the Uber or Lyft example, value is delivered on first use in terms of lower cost and convenience to customer. No waiting for ROI by the customer.

Differentiation

What does “think different” really mean?

Some may remember Apple’s history in the 90s. The Macs were not selling. Steve Jobs was not at Apple. It was an IBM-dominated world. Conventional wisdom imposed on Apple: collaborate, integrate the Mac with IBM, DEC … and differentiate. Did that. Made no real difference.

In established enterprises, differentiation is emphasized. You only have to do something better than your competitors. This mindset limits the context of reference to what exists or the experiences of decision makers. Apple’s “think different” mindset took a different approach to “making a difference.” If you had the freedom to build the perfect computing solution, what would you build? Instead of whining, contribute to designing a defensible solution with your peers. The results were documented in a comprehensive architecture called VITAL. The architecture prescribed the ecosystem and services in a new framework for computing including support for personal digital assistants (PDA) aka smartphones. Smartphones working in harmony with millions of applications and data distributed globally are an example of making a difference through collaboration of people and multiple technologies.

IoT is now entering a new phase. Smartphones interact with humans, IoT devices and sensors don’t. Device-to-device or machine-to-machine communications work independent of humans 24/7 at digital speeds. Logistics is an ecosystem of ecosystems. IoT in Logistics virtually integrates ecosystems into a dynamic digital network.

Time to think different again and break through barriers. Get the basics right.

All IoT Agenda network contributors are responsible for the content and accuracy of their posts. Opinions are of the writers and do not necessarily convey the thoughts of IoT Agenda.

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