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Organizations can use IoT in supply chain management to create a more adaptive process and aid in emergency situations, such as the spread of the COVID-19 pandemic.
Virtually every industry has been affected by the COVID-19 virus, which has caused major disruptions in supply chains that organizations must scramble to fix. Supply chain managers must answer how to source parts or components supplied by countries that are hard-hit, such as China, Italy and Spain, and may be scarce or unavailable. Suppliers should also ensure that supply chains are resilient in the face of emergencies beyond the COVID-19 pandemic. They must be able to quickly and flexibly route supply chains around stricken geographies and reliably identify and switch replacement components if any are unavailable. Replacement parts might require downstream changes. Longer term, how will IoT in supply chain management prepare organizations for future emergencies?
Understand the challenge of supply chain disruptions
The toilet paper shortage prompted by the COVID-19 virus is one example of a supply chain that needs better preparation for emergency situations. Household toilet paper has been scarce or unavailable since early March in the U.S. and varying time frames in other countries. To improve the supply chain, consider why toilet paper is unavailable.
The primary components of toilet paper -- water and wood pulp -- aren't scarce, nor is there an issue of trucks getting to stores. The real issue is that there are two separate supply chains for toilet paper and transitioning from one to another has been challenging. To understand how IoT can transform supply chains, let's examine the toilet paper supply chain issue.
Pre-COVID-19, a significant percentage of people used facilities in public places, such as offices, gas stations and restaurants, which are supplied via a commercial supply chain. The actual commercial product slightly differs from retail toilet paper and is packaged differently. Suppliers ship and distribute differently. For example, commercial organizations buy in bulk from different distributors more than an average consumer in a grocery store.
With the advent of COVID-19, consumers didn't suddenly start creating double or triple the toilet paper waste per day. They migrated to home use of bathrooms en masse. Some people did start hoarding, which also contributed to a spike in overall demand.
The challenge for the toilet paper supply chain is the retail supply chain was overwhelmed with demand and couldn't tap in to the commercial supply chain fast enough. For instance, even if a retail store wanted to sell commercial rolls and could somehow arrange to get them, commercial rolls lack the bar codes that retail stores require. Retail stores that took this approach ended up manually printing bar codes and having clerks attach them to the commercial rolls. That's a slow, manual process.
How IoT strengthens supply chains
The toilet paper supply chain is a simple example, but it illustrates the critical areas where IoT will make supply chains more adaptive and resilient. These include the following.
Predictive analytics and early warning. IoT isn't just about sensors; it also includes analytics. With a properly outfitted IoT network, manufacturers should be able to quickly determine that a supply chain is overwhelmed and locate alternate supply chains and component sources. For the toilet paper supply chain, suppliers should see that retail toilet paper in Northeastern stores is selling out and identify where commercial toilet paper is available.
Standardized automation. IoT devices are embedded into manufacturing, production and distribution. Manufacturing plants are already highly automated. IoT devices can automate and standardize processes to make them faster. In the toilet paper supply chain, if it were possible to automate and standardize the application of bar codes, for instance, adding them to commercial toilet paper wouldn't need to be a manual process.
Enhanced logistics. IoT devices can track in real time the location of components and distribution vehicles. In an ideal IoT-enabled world, a retailer could quickly locate a fleet of trucks distributing commercial toilet paper and commission them to deliver to retail locations.
Cybersecurity. Supply chains today are notoriously insecure, and the application of IoT by itself can't necessarily fix them. However, organizations have started to secure IoT by ensuring that every component in every supply chain is authorized and every change validated, which prevents unauthorized hacking. For example, vendors like Intel, IBM, Hewlett Packard Enterprise and Cisco use blockchain and Hyperledger techniques to ensure supply chain transparency and security. Cybersecurity may not seem like an overwhelming concern in the case of toilet paper, but for many products -- such as PC motherboards or semiconductors -- it is. Either way, having all of the above transactions recorded in the Hyperledger to reassure purchasers that the provider didn't deliver compromised goods.
If all these measures were in place, retail stores could have reacted in early March to the predicted toilet paper shortages by knowing they were about to occur using predictive analytics, standardizing automation by inserting commercial rolls seamlessly into the supply and ensuring their timely delivery with enhanced logistics.