Today 6.4 billion devices are connected to the internet worldwide, which is a huge improvement to the mere 1,000 devices that were connected in 1984. With help from the Internet of Things (IoT), Gartner expects the number of connected devices to reach 20.8 billion1. The IoT is a network of objects, sensors, and information sources that automatically feed information to a central database2. IoT technologies vary from company to company and throughout different industries; however, its effect on the supply chain industry will be evident in the way shippers and third party logistics providers communicate and operate.
Gartner predicts that by 2020 more than half of business processes and systems will utilize some element of IoT3. Supply chain professionals are among those who’ve begun to integrate IoT into their processes. A recent study by Eye for Transport (EFT) and AT&T showed that 41% of logistics industry responders already have an IoT solution in place and 87% are looking to expand their use4.
Why IoT is a “Thing” in Supply Chain
A supply chain is made up of numerous parties including manufacturers, suppliers, and shippers. Implementations of IoT will provide up-to-date information to all those involved and the accurate, real-time data will allow for more informed decisions and communication to those in the supply chain and beyond. Ultimately, it can give customers more information regarding their goods and improve customer service. The influx of information can also help different entities in the operation stay informed, make predictions, and even prevent possible disruptions such as inventory outages or equipment issues.
Benefits of Implementing IoT
Technology can be a major differentiator and advantage in both gaining and retaining customers. Many of the shippers and 3PL providers who have implemented IoT technologies have utilized GPS, RFID readers, and sensors embedded throughout equipment and products to provide real-time data. Prior to IoT, supply chain professionals would take a sample of data to analyze the performance of their operation within certain time frames. With IoT technologies, sampling data on a regular basis will be phased out, as there will be more real-time data of the entire operation, which will be a better representation of performance.
Challenges of Utilizing IoT
Implementing IoT into supply chain operations has many benefits; however, it does also present challenges. Like many technological advances, the more technology that is used, the more at risk the operation becomes to cyber threats. It’ll be important to take the right precautions to ensure the operation is completely secure. Similar to security, as more technologies are added, there needs to be systems in place to support the data from a management perspective as well. Many operations have utilized a central management system or worked closely with their 3PL providers to better manage and analyze the data. As new technologies are installed, integrating the entire network will make data transferring seamless. For instance, utilizing business intelligence tools will aid in analyzing and organizing the data and then drive action.
The technologies associated with the IoT trend will continue to evolve as more companies implement these tools. With IoT, companies will have more data to improve communication, visibility, and management and proactively make decisions about their operation.