Last week, when I took a sip of my first cup of coffee in the morning, I discovered the milk was sour. I wanted to know everyone and anyone who could be held responsible — the store manager, the delivery truck driver, the quality control supervisor of the dairy farm. You don’t want to mess with my morning coffee.
Until recently, it may have seemed too much to ask, but it’s now possible, with today’s technology, to track every step of the supply chain for the contents in your refrigerator. Today manufacturers are using IoT to track products through their lifecycle to achieve higher levels of efficiency. The combination of smart sensors, cloud technology and analytics are making supply chains smarter and more efficient, with the ability to track each product through every stage of its lifecycle.
Here are some examples of how IoT can be used to better manage the supply chain:
- Inventory control — IoT can be used to provide a real-time window into inventory levels by measuring product quantities and, when necessary, automatically sending an order to a supplier for depleted stock. Product availability can be displayed on a screen to respond to customer inquiries. Eskimo Cold Storage uses RFID tags to track the location of its 32,000 pallets in its 10.9 million cubic foot cold storage, eliminating $208,000 in costs associated with locating lost inventory and $25,000 in annual chargebacks due to lost merchandise.
- Shipping — When shipping products, companies are using IoT to monitor the product condition during the entire trip from beginning to end, instead of relying on testing at the end of the journey. Maersk uses IoT to monitor 300,000 refrigerated containers containing fresh produce that needs to be shipped in a tight range of temperature and humidity. In addition to protecting perishable merchandise, Maersk only needs to visually inspect 60% of its containers since data from sensors provides certainty that the goods in these containers have been kept in good condition during the shipping process.
- Warehouse management — Using IoT, every single part can be tracked from when it’s first manufactured to when it’s assembled and shipped to an end customer. Walmart cut taking physical inventory from one month to just 24 hours by using sophisticated drones that fly through the warehouse, scan products and check for misplaced items. BMW uses sensors to follow a part from the point it was manufactured to when the vehicle is sold from all of its 31 assembly facilities located in over 15 countries, ensuring everything gets to the right place while utilizing the minimum amount of resources.
- Delivery — The last mile is essential. Estimated time of arrival synchronization can help trucking companies place the right trucks in the right areas at the right times to avoid backups in the loading areas and ensure that other resources, like fuel and hourly employee time, are not wasted. Grocery retailer Ocado equips delivery vans with a range of IoT sensors to log valuable information, such as the vehicle’s location, wheel speed, engine revs, braking, fuel consumption and cornering speed, to select the best route for the most efficient delivery.
- Supplier management — The data obtained through asset tracking is also important because it allows companies to tweak their own production schedules, as well as recognize subpar vendor relationships that may be costing them money. According to IBM, up to 65% of the value of a company’s products or services is derived from its suppliers, which provides companies with a huge incentive to manage the relationship more efficiently. North West Redwater built a new bitumen refinery across six square kilometers that included over 100 contracting companies. An IoT system was used in order to simplify the contractor onboarding process, decrease operating costs and control the project schedule.
There are certain pieces of the puzzle that need to be put in place to make a working IoT system, including a flexible infrastructure for complying with regulations, scalability to manage the data tsunami from thousands of sensors, as well as comprehensive and seamless data integration. Several different systems in the back office as well as the shop floor need to be integrated including product lifecycle management, enterprise resource planning and customer relationship management systems to achieve end-to-end process optimization.
However, investing in IoT to streamline the supply chain is well worth the effort. With all the potential improvements in customer service and efficiency, it’s only a matter of time before IoT is an expected and necessary part of managing the supply chain.
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