The profound impact of the Internet of Things on supply chains

The Internet of Things (IoT) is the catalyst in creating more responsive supply chains by providing real-time, autonomous insight into your operational execution.

SC IoT

DHL and Cisco recently published a report (linked here) that indicated the Internet of Things will deliver a $1.9 Trillion boost to Supply Chain & Logistics Operations. The report estimates that there will be 50 billion devices connected to the Internet by 2020 compared to 15 billion today. The areas benefiting the most will be in warehousing, and freight transportation. For this article, I will purely focus on freight transportation.

With the push into omni-channel fulfillment, the supply chain industry is going through a dramatic shift. “Faster, Better, Cheaper” continues to be theme, but with a more passionate focus on the customer.   Why, because in the age of “instant gratification”, companies understand that consumers want to have the simple but powerful experience that enables them to transact easily and have product in their hands that same day. Large entities – such as Amazon – are disrupting the status quo, through commerce execution transacted at light-speed. This market pressure, coupled with unprecedented industry forces demanding improved customer experience with greater fulfillment predictability is forcing significant changes in corporate IT systems. Progressive companies have already responded to this pressure, by taking a hard look at how they can innovate and transform their supply chains by augmenting existing IT investments with new capabilities.

To attain such velocity with control and consistency would have most supply chains creaking at the seams, as companies struggle to keep the lights on, while attempting to make radical improvements.  ‘Radical improvement’ initiatives for most large enterprises have traditionally come in the form of multi-year, multi-million dollar rollouts of legacy capabilities from the large software companies. Unsurprisingly, these vendors are themselves also wrestling with the same challenges of adapting to rapid change driven by increasingly demanding customers.

Radical improvements require transformational thinking and the application of a new wave of innovation.

Consider for a moment, a home security use case. Would you hire a security guard or buy a home security service? Unless you are Justin Timberlake or the President of the United States, chances are you would opt for a monitoring service from the likes of ADT? They would provide you a package of sensors tracking key aspects of your home’s security. These sensors would then be connected through a network to ADT’s mission-control room, where software is looking for exceptions and specialists are ready to intervene when needed.  Mobile enablement means you always have the ability to be in control of lights, house temperature, video feeds and security from your smart phone, ensuring your engagement throughout the whole process.

In the context of today’s supply chains, companies tend to have the equivalent of ‘security guards’ at their facilities, who are armed with radios, pen and paper or fingers on keyboards, ready for action.  Is it not obvious that there are better approaches to assure velocity, control and consistency?

Why can’t the ADT approach be applied to the supply chain industry? I would contend, much like the use of motion and smoke detectors in the context of home security, supply chains can leverage sensor technology to accurately locate, track and measure the movement of inventory.

My opinion is that the “The Internet of Things” is the technology platform that is providing the much needed transparency and agility into ever more responsive supply chains that are going keep companies competitive.

 

Matt YearlingMatt Yearling joined PINC Solutions as chief executive officer in March 2013 and is responsible for the overall strategic and operational management of the company. Matt’s past roles include vice president and general manager of Encryption Products at Symantec Corporation, senior vice president of Global CRM Product Development at Sage Inc., Chief Technology Officer for Embarcadero Systems Corp (a Ports America company). As vice president of Oracle On Demand Matt played a pivotal role in making it Oracle’s fastest growing line-of-business.