During his TED talk on the Internet of Things (IoT) technologist, Dr. John Barrett, described how every thing: appliances, furniture, vehicles, equipment, soil, food, animals and humans can become connected, identified, monitored, managed, and controlled. By 2032 he predicts that each person could come in contact with 3,000 to 5,000 connected things each day. IBM sees the Internet of Things as the planet’s new central nervous system.
The Internet of Things is already here and developing—monitoring our footsteps, heartbeats, lighting, home temperature and environment— and it will continue to grow at a rapid rate: “The growth in IoT will far exceed that of other connected devices. By 2020, the number of smartphones, tablets, and PCs in use will reach about 7.3 billion units,” said Peter Middleton, research director at Gartner. “In contrast, the IoT will have expanded at a much faster rate, resulting in a population of about 26 billion units at that time.”
The IoT and the Supply Chain
This will have a huge impact on the supply chain as we currently know it. In his talk, Dr. Barrett describes how a food processing company waiting for a delivery of shellfish will be able to not only “know where the food delivery is, but its entire storage and shipping history since the moment it came on board” the boat. Already, some vendors are able to remotely monitor their vending machines and access data about temperature, supply, and theft. In the future vending machines will be able to recognize a customer, recall their past preferences, and “even refuse to vend a certain product based on a shopper’s age, medical record, dietary requirements or purchase history.”
How else will we see IoT inform end-to-end transactions within the supply chain? Transparency in the supply chain is already growing with the swell of ERP and SCM, and with its growth it brings collaboration, clarity, and trust. With the increased use of Radio Frequency Identification (RFID) computer chips can talk to each other, and gather and deliver more detailed information than ever. Visibility in the chain will continue to expand and improve operations. The IoT will impact the supply chain in many ways including the following:
- Stock management
- Preventative maintenance
- User insight
- Manufacturing flow management
- Product stability
- Operational efficiency
- Improved fleet management
An Example of Success
Many companies are already employing the IoT, and as a result they are seeing improvements while working out the kinks of this new technology. UPS has increased single carrier deliveries with the use of sensors. According to David Barnes, the company’s chief information officer, more than 200 measurements can be tracked on a delivery truck from “how fast the vehicle is traveling, how aggressively it’s accelerating or decelerating, the RPMs and the fuel consumption. We can hook into the engine bus environment. We also put in a GPS unit. There are sensors on the engine and on components like starter motors and seat belts.” The analysis of this data is a main focus for UPS and has resulted in improved safety management, fuel efficiency, environmental impact, and customer satisfaction. One carrier reported that his deliveries increased from 90 a day to 120 a day. UPS drivers have seen an increase in salary as the company’s revenue multiplies.
The $1 billion UPS invests in technology per year is producing results, but what are the downfalls of telematics and other advancements? The union representing UPS workers has already set forth some demands: drivers cannot be monitored without being informed and cannot be disciplined “based solely on data.” One driver noted that it “does feel like big brother.”
Issues of security, privacy, accuracy, capacity, and the growth of software substitution in the workplace are all matters that need to be examined as IoT explodes. As IoT matures, it is wise for companies, especially those in manufacturing and logistics, to pay close attention. As reported by Gartner, by 2020, “Economic value-add (which represents the aggregate benefits that businesses derive through the sale and usage of IoT technology) is forecast to be $1.9 trillion across sectors.” With the increased possibility, reach, and data of the IoT will come complex decisions and opportunities for businesses.
Fronetics’ Kate Lee has written extensively about the Internet of Things and the supply chain. Her article, How the Internet of Things will change your world, was published in the Quarter 1, 2015 edition of Supply Chain Quarterly.