Applying the Internet of Things to the Supply Chain
Business Solutions We sat down with Christine Boles, general manager for Intel’s industrial and energy solutions division, to learn about how supply chains can leverage modern technology.
How would you describe IoT as it pertains to supply chain to someone who is not well versed in the topic?
Christine Boles: The internet of things (IoT) is the ability of everyday objects to connect to the internet in order to send and receive data. Only 10 years ago, approximately 10 million devices were connected to the internet. Today, it is up to 20 billion, and by 2020, analysts estimate we will reach 50 billion devices. Some of the industries that are expected to make up that growth worldwide are transportation and automotive, smart homes and buildings, manufacturing, industrial, and energy.
The IoT allows devices to share their sensed or analyzed information without help from people or even from places where people are not physically present, like at the top of electrical poles or in remote weather stations. Sensors are devices that detect and translate input from the physical environment into data for sharing.
IoT solutions use sensors to collect the information manufacturers need to better monitor the steps involved in the production and distribution of a product, otherwise known as the supply chain. Supply chain operations can be dispersed across many locations and oftentimes around the globe. Sometimes these places are hard to access, like onboard a transatlantic flight, but fortunately the IoT provides the connections and means to share information.
Sensors connected to the IoT allow manufacturers to track how products are handled and transferred, from the delivery of raw materials to the factory to finished products arriving at their final destination. This visibility enables manufacturers to improve the efficiency and profitability of their supply chain, directly impacting the bottom line. For example, up-to-date supply chain information allows manufacturers to more closely monitor production and inventory levels to reduce out-of-stock situations.
Supply chain visibility may start with raw materials beginning their journey and IoT technologies communicating their size and weight, which helps the shipping company load its vessel in the most effective way and maximizes the load it can carry. Sensors on board each pallet communicate to their recipients when the vessel leaves port, and provide arrival updates and package condition reports throughout the journey. If the shipment falls behind schedule, the technology alerts the recipients so they can get the goods in a more timely fashion from another source if needed. This insight on inventory delivery also provides manufacturers with the lead time they need to plan for any other dependent activities.
How does the IoT affect the modern supply chain?
A global supply chain presents visibility problems for 89 percent of manufacturers, creating issues such as excess inventory, difficulty tracking vendor service levels and idle labor or line capacity. Yet, running an efficient supply chain is critical to a manufacturer’s profitability, and disruption or delays can be costly or even fatal to a business.
The IoT will connect people, processes, and data across the supply chain, ranging from raw material suppliers, production lines, warehouses, transportation and logistics, customer docks, and other touchpoints. With a connected supply chain, companies will have greater visibility into their entire operation, resulting in greater efficiency, lower costs, and the ability to plan for disruption as soon as it happens.
This enhanced visibility relies on sensors to collect complex information about materials in the supply chain, such as their viscosity, transportation temperature, location, environmental humidity and whether they are being transported in the correct orientation or if they are being shaken up more than they should be. This information is crucial to many different industries, whether these are medicines that must be kept below a certain temperature, electronic devices which must be handled carefully or dry mixtures that must not be exposed to water vapor.
Although traditional methods can provide this information today, it is usually examined manually at the end of the supply chain segment. For example, if milk is being transported overland to a dairy products factory, it typically needs to be kept between zero and one degree centigrade throughout its journey. A traditional temperature recorder may keep a log of the actual milk temperature, which can be examined by the goods recipient before the milk is unloaded at the factory. However, if the factory staff finds the milk exceeded its temperature for a brief period at the start of the journey, the product may need to be rejected. This discovery could idle the factory and delay shipment of its products.
“Running an efficient supply chain is critical to a manufacturer’s profitability.”
In this case, the milk temperature readings were used to reject a particular shipment. With the IoT and big data analytics, these readings can be combined with information from other situations to identify the root cause of the temperature problem. Perhaps it occurs when the outside temperature goes above 80 degrees, when the truck idles for more than 30 minutes, or when the refrigeration system is from a certain vendor. In the future, the combination of the IoT and sensor data will expand visibility, learning, and actions so manufacturers can react faster, predict the future and possibly change the future. The IoT also enables businesses to gain insights into ways to improve efficiency and service levels, or identify new revenue streams, like offering data analytics or monitoring services to their customers.
A connected supply chain solution in this instance would sense the change in temperature and immediately notify the factory recipient that the milk had exceeded its permitted temperature. This provides factory staff with the information they need to make a critical decision to minimize the impact of the spoiled raw material. It allows them to terminate that delivery and order a new shipment to be sent out immediately, saving hours of time and reducing any delays to the factory’s production.
The power of the IoT in the supply chain is the combination of sensing, recording and real-time reporting of information on product states, locations and shipping. The power of the IoT also is about analyzing different sets of data to find correlations used to generate actionable insights that can drive improvements. In our milk example, this capability could help us anticipate a rise in outside temperature or identify faulty refrigeration equipment. This information gives manufacturers powerful time and money saving tools that can make their operations far more efficient, especially for international shipments. With IoT devices tracking the location of pallets of goods on board a ship heading their way, the recipients can access accurate arrival times for their goods in port, allowing them to get trucks and loaders to the docks at the correct time and reduce associated waiting times and staff costs.
Why is integrating the IoT into your supply chain important?
Maintaining an efficient, high-performing supply chain is critical for success in a competitive global manufacturing market. The IoT offers manufacturers tools and technologies to gain greater visibility of their end-to-end supply chain, allowing them to respond to problems in near-real time and plan to mitigate the effects of any disruption. The connected supply chain empowers manufacturers to reduce the costs and increase the efficiency of their end-to-end logistics operations — ultimately impacting profitability. IoT solutions for a connected supply chain enable sensing at the package level while maintaining the communications quality essential to a fully visible supply chain.
What can companies do to prepare their supply chain processes for IoT integration?
Before the availability of IoT solutions, implementing the type of tracking that provides full supply chain visibility with individual, package-level tracking was difficult and expensive. The IoT, however, is set to disrupt supply chains and logistics.
Integrating IoT solutions in supply chain starts with connecting the unconnected — those devices that cannot yet communicate over the internet. These devices will be able to share data with others, making them smart and more capable. End users will then have access to more information they can use to make better decisions. For many companies, it’s not a question of “if” they should use the IoT, but a question of “when” they will. Those companies in wait-and-see mode will only be late to the journey.