Roadmap: Using IoT in the Supply Chain
William Craig, CPA – Senior Manager Market Research – Digital Transformation
With the proliferation of IoT (Internet of Things) devices being deployed throughout the supply chain process, companies can now get real-time visibility into unprecedented amounts of information about each supply chain resource (i.e. asset, person, process, etc.). These technological advancements have created a major paradigm shift in how supply chains are managed today.
RFID’s, GPS, sensors and other IoT devices can be now be embedded or associated with inventory, shipments, raw materials, equipment, containers, warehouses, vehicles, drivers, assembly lines, and more; providing a wealth of useful information and insight which was never previously available.
These IoT devices can detect things like location, environmental factors (temperature, humidity, etc.), usage, performance, motion, speed, altitude, weight, pressure, vibrations, light, sound, smoke, moisture, and other conditions associated with the resource.
In some cases, the device can either make an autonomous decision, or it will communicate these key data points to another device, system or person, which can analyze the information and make a decision (i.e. order more inventory, create an equipment service ticket, send an alert, reroute a truck due to accident, etc.)
Let discuss some major use cases for IoT in the supply chain.
IoT provides a whole host of opportunities for optimizing inventory management. When inventories are being depleted, IoT sensors can detect when re-order point thresholds are reached and then communicate this information to the ERP system to order and restock a product, eliminating human intervention. In turn, when items are being depleted on the customer shelves, sensors can signal to the supplier to ship more of an item and adjust demand, providing a higher level of customer service.
RFID tags allow for the tracking of the exact location of raw materials, work-in progress and finished goods, eliminating the need for manual asset tracking and reporting. Enabled with this information, manufacturers and distributors can reduce lead times, increase equipment utilization, reduce inventory loss, improve productivity, reduce warehousing costs, improve customer service, increase asset velocity, improve safety, and the list goes on!
For perishable items (i.e. fruit, ice cream, meats, pharmaceutical items, etc.) that have an expiration date and must be kept at certain temperatures, monitoring environmental conditions is critical. Armed with information delivered from IoT, items can be efficiently shipped to minimize spoilage based on expiration dates. Also, alerts can be sent if the temperature thresholds are exceeded. In fact, sensors on the refrigeration equipment, can signal a potential future problem before it happens! Take it one step further with preventative maintenance leveraging data points delivered through IoT, equipment is serviced during normally scheduled service windows and the problem never happens.
The ability to continuously monitor shipments in real time though IoT can greatly enhance an organization’s overall effectiveness. Trucks, trains, ships, planes, etc. can provide numerous data points that can be analyzed to impact shipments. Using IoT in conjunction with other connected devices, key information such as location, delivery time, weather, traffic, road conditions, tire pressure, speed, acceleration, fuel efficiency, brakes, odometer, engine performance, driver’s hours of service, etc. can be monitored to optimize on-time delivery, customer service, safety, efficiency, costs and overall effectiveness.
A truck can be alerted of a traffic accident and automatically rerouted to ensure on-time delivery. A train carrying chemicals can monitor for safety related issues – leaks, temperature, vibrations, rail issues, etc. A ship carrying crude oil can be rerouted when a major storm is approaching. A truck carrying fresh produce, can monitor temperature, humidity, etc. in the trailer and alert the driver of any possible issues. Based on historical information, vehicles can be routed the most cost effective and time efficient way, including optimal speed recommendations. Companies can be advised when drivers are coming up on the maximum allowable driver hours.
Preventative and Predictive Maintenance
Supply chains are typically very capital intensive, requiring a significant investment in equipment, machinery, vehicles, structures, etc. Optimizing the performance of capital equipment is critical to the success of the supply chain. Unplanned downtime can significantly impact the process.
With preventative maintenance, being able to monitor miles driven, hours of service, etc. through IoT, allows capital to be maintained on scheduled intervals and extends the lifespan of the equipment. With predictive maintenance, IoT can monitor key readings for tires, brakes, fluids, engine, etc. and schedule the asset for maintenance when certain toleranc