The internet plays a critical role in connecting digital devices including smartphones, PCs, watches, applications, and other web-enabled items. These devices share information more quickly to deliver usable data. Through IoT, for instance, an individual can turn the lights off, close the garage door, or lock rooms via mobile app.
This interconnectedness reinvents how the supply chain operates today. It is projected that global spending on IoT will reach $1 trillion by 2022 driving trillions of dollars of logistics value from efficient operations and reduced costs. By placing IoT and advanced analytics that generate actionable insights, companies have better visibility across their supply chain.
For instance, ABB, a power and robotics company, is one of the leading firms taking advantage of IoT by deploying connected sensors across five continents to oversee robots’ maintenance requirements. This allows the company to predict when to replace the parts just before it fails. The value created by IoT to ABB is substantial including minimized downtime, increased machine uptime, higher productivity, and improved customer service.
IoT creates efficiencies in today’s disruptive industry including;
Real-time product tracking
The ability to locate the exact location of products and understand its condition in real-time is a game-changer for the supply chain. Using IoT-enabled sensors and devices, managers can virtually monitor the condition of inventory from the production floor to customers by attaching tiny devices or tags on the product. For example, a fresh produce exporter can track temperature levels inside the reefer container during ocean transit. If the temperature goes below the required level, the shipper can adjust the temperature remotely. Not only that, but the shipper can also monitor the location of their shipment in real-time.
Better quality control relies on accurate data. Manual inspection during production not only is prone to error but also a wearisome task. Thanks to sensors and laser devices that can handle complex inspections automatically with precision and reliable measurement. These devices transmit data continuously to inspector via software allowing companies to monitor and diagnose issues in real-time. Data is accumulated overtime that is useful for process control improvement, optimization, and predictive maintenance.
Demand forecasting accuracy
Capturing real-time consumption data reduces demand variability and eliminates distortion, thus, driving forecast accuracy. IoT empowers manufacturers to gather real-time data from end-users allowing them to produce products based on true demand and therefore mitigating bullwhip effect in the pipeline. The bullwhip effect is created when there is a lack of information-sharing of actual demand within stakeholders in the supply chain. Bullwhip effect is characterized by an increasing swing in inventory as it moves farther up through the supply chain.
Sensor-embedded products allow the firm to monitor user interaction with the product in real-time, enabling the company to respond to customers more quickly. The giant food company, Nestle, adopts IoT by connecting a device on its coffee machine to collect usage data. The machine transmits information including the number of cups it dispenses in each setting – insightful data that the sales team can use to introduce a new feature.
Spot issues and opportunities
With millions of terabytes of data available every day, it is impossible for the human brain to process and analyze that amount to generate meaningful insights for better decisions. Fortunately, IoT comes with analytics capability to understand the data through machine learning algorithms – providing more accurate and quicker models or insights useful to analyze patterns and opportunities. The information generated by analytics lays the foundation for further analysis to answer complex issues and enable businesses to spot opportunities.
Revenue and profit growth
The ability to understand how, when, and where the product is used is invaluable to the business. The more visibility companies have with how consumers interact with the product, the more creative their supply chain would become. IoT creates new ways to understand and respond to customers. Because companies have better consumer touch, they can update or even develop new products and solutions not just to drive growth but also to further improve customer experience.
Technology offers endless possibilities for companies to accelerate supply chain performance and increase market share. It provides so much value both to organizations and consumers – companies gain intelligence while users enjoy a world-class product experience. The digital transformation when properly executed, would get the business an edge over competitors or even become an industry disruptor, setting the benchmark that others would have to emulate. It would be extremely difficult for the business to survive in an evolving market if digitization is not a priority.