Across the world, experts in multiple industries seem to agree on one core assessment: We are only at the beginning of the Internet of Things (IoT) revolution.
Consider the scale of future impact. Over the next five years, humans will more than triple the number of "things" connected to the Internet, growing them from 15 billion today to 50 billion by 2020. Still, 50 billion represents only a tiny fraction of what could be connected — something on the order of 3% of all connectable things.
The sizzling pace of innovation in recent years — particularly the proliferation of embedded sensor technology, wearables, and apps — has already caused incredible change, and in just a few short years. What will the supply chain world look like when not 1% of things, nor 3% of things, but 30% of things are connected?
Five ways IoT will add trillions of dollars in value
A series of recent in-depth studies have concluded that IoT, by itself, could generate several trillion dollars of new worldwide revenues over the next decade.
"As the birthplace of data, IoT devices and the subsequent data supply chains they’re connected to are ground zero for conversations about data ethics," Steven Tiell, a senior principal at Accenture's Technology Vision + Digital Trust practice, told Supply Chain Dive.
This big-sized value will come from five primary drivers:
- innovation and revenue;
- asset utilization;
- supply chain and logistics;
- employee productivity improvements;
- and enhanced customer and citizen experience.
Supply chain and logistics alone are estimated by Cisco to provide $1.9 trillion in value, which is a promising indication of the untapped potential and profits to gain from utilizing IoT in this industry.
"The global retail industry is in the midst of what might be best understood as accelerated Darwinian natural selection," Jon Stine, Intel's global director of retail sales, told Supply Chain Dive. "Supply chain innovation — with a focus upon the digitizing of processes, the used of advanced analytics, and the need for speed — will be a key factor in determining whether a brand survives or thrives."
Experts see optimal conditions for IoT to take off in the supply chain industry.
The rise of mobile computing, consumerization of IT and sensor technologies, 5G networks, and big data analytics are all factors "pushing" IoT adoption.
Logistics providers and their customers are also "pulling" adoption by increasingly demanding IoT-based solutions such as optimization of efficiency and network utilization, detailed shipment tracking, transparency and integrity control.
In the retail industry, this is playing out within the race for omnichannel expertise, according to Stine. "To win shoppers who expect delivery measured in minutes (not days), retailers will not only ship from store, but ship one-unit orders from distribution centers," he said.
When we connect the unconnected — when we light up "dark assets" — vast amounts of information emerge, along with potential new insights and business value.
Supply Chain Dive
Ultimately, IoT in the logistics industry comes down to two important capabilities: "sensing" and "sense-making."
"Sensing" refers to the monitoring of different assets within a supply chain through technologies and mediums, while "sense-making" is the handling of vast amounts of data sets that are generated as a result, and then turning this data into insights that drive new solutions.
As with most technology transitions, it is helpful to look at IoT in a broader context and to consider some of the best practices from other industries. This can inform and inspire the use of IoT in logistics.
The future is here: IoT is already improving asset utilization
Optimizing asset utilization to drive greater operational efficiency is at the very heart of IoT's value proposition in the supply chain.
Vehicles are among the assets most ripe for improved efficiency, especially in terms of traffic and fleet management. As a result, these assets have pioneered the technology's use within supply chains.
In-vehicle telematics and vehicle-infrastructure integration have been vanguard applications in the use of sensor data. Automotive manufacturers and transportation operators have invested substantially in connected vehicles. With IoT, traffic and fleet management applications herald a new wave of efficiency gains.
Fleet management is also crucial at the Port of Hamburg, the second busiest port in Europe.
Its "smartPORT" initiative has raised efficiency and prepared the port for additional growth. The overall goal is to maintain, modernize, and improve the Hamburg Port Authority’s IT infrastructure to support efficient operations and economic development, while minimizing the impact of traffic on local citizens. An IoT-based approach coordinates all aspects of harbor operations impacting ship, rail, and road traffic.
Using IoT means that supply-chain firms gain clearer visibility on the movement of goods — foot by foot, second by second.
Supply Chain Dive
So far, the Hamburg Port Authority has installed more than 300 roadway sensors to monitor traffic in the port area and to track wear on bridges. Digital signs and mobile apps give drivers traffic and parking information. Sensors also extend to waterways (using radar and automatic identification systems to coordinate ship traffic), and a solution that integrates roadway traffic data to help manage traffic disruptions that may occur when ship traffic requires bridge closures around the port area.
But operational efficiency is not exclusively about lowering costs. IoT technology has strong potential to enable greater environmental sustainability.
IoT sensors are ideally suited to tracking all kinds of resources, including petroleum and natural gas, electricity and water. In fact, the technology promises to help reduce waste, prevent disasters and be a critical component of the smart energy grid of the future.
In so doing, it is inviting professionals to investigate other ideal use cases for the technology.
An opportunity to light up 'dark assets' in the warehouse
Warehouses have always served as a vital hub in the flow of goods within any supply chain. But in today’s economic climate, they also serve as a key source of competitive advantage for logistics providers who can deliver fast, cost-efficient, and increasingly flexible warehousing operations for their customers.
With thousands of different types and forms of goods being stored in the average warehouse today, every square meter of warehousing space must be optimally utilized to ensure specific goods can be retrieved, processed, and delivered as fast as possible. The result is a high-speed, technology-driven environment that is ideal for IoT applications.
From pallets and forklifts to the building infrastructure itself, modern warehouses contain many "dark assets" that can be connected and optimized through IoT.
IoT allows for these "dark assets" in warehouses — including equipment and pallets — to be "lit up," generating value from every square meter. Consider a short list of some of the more interesting use cases:
- Pallet and item-level tagging for smart inventory management, real-time visibility, accurate inventory control
- Video cameras for damage and theft detection, pile-ups
- Equipment and machinery tagging and central management for optimal asset utilization, predictive maintenance, worker safety
- Connected wearables for safety, workforce efficiency and work experience
- Connected HVAC, lighting for smart warehouse energy management
Equipment vendors today are catching on to the opportunity, and releasing new products that can participate in an IoT-enabled environment.
Swisslog’s "SmartLIFT" forklift sensors with directional barcodes are placed on the ceiling of the warehouse, for example, with indoor GPS providing accurate location and direction information. Ravas' "smart forks" incorporate weight scales and load-center measurement technology for pallet trucks. Meanwhile, Locoslab's "connected workforce" offers precise localization of mobile devices in indoor environments using RFID to monitor movements.
The next generation of track-and-trace
Experts now expect that IoT is likely provide the next generation of track-and-trace: faster, more accurate and predictive, and more secure.
Why is that important? Consider the stats: CargoNet recorded a total of 741 cargo theft events in the U.S. and Canada last year — with organized crime targeting ports and rest areas. Theft costs shippers and logistics providers billions of dollars each year, including inventory delay impacts, and in the cost of stolen goods.
Using IoT means that supply-chain firms gain clearer visibility on the movement of goods — foot by foot, second by second. This translates into item-level condition monitoring, enabling ensure that goods arrive in time, at the right place, and intact.
The final part of the delivery journey (the "last mile") is highly dependent on labor. As consumer demands become more sophisticated and delivery points continue to multiply, logistics providers face new challenges. They need to find creative new solutions for this important stage in the supply chain — cost-effective solutions that provide value for the end customer and operational efficiency for the logistics provider.
"As the birthplace of data, IoT devices and the subsequent data supply chains they’re connected to are ground zero for conversations about data ethics."
Steven Tiell
Senior Principal, Technology Vision + Digital Trust, Accenture
IoT-powered logistics requires strong collaboration, high levels of participation between different players and competitors within the supply chain, and a common willingness to invest. As IoT evolves to reach its full potential, IoT solution providers must address the legitimate concerns raised by citizens and policymakers about privacy and control of personal information.
Five ingredients have been embraced by startups pushing forward with the build out of the use cases, according to an analysis by Supply Chain Dive:
- Standardized approaches enable unique identifiers or ‘tags’ for various types of assets
- Seamless interoperability for exchanging sensor information
- Establishing trust and shared ownership of data, to overcome privacy issues in IoT-powered supply chains
- Refining IoT’s reference architecture
- Changing the business mindset, to embrace IoT’s full potential
However, important questions remain about the future of IoT, particularly in 3 realms: work, security, and privacy.
When we connect the unconnected — when we light up "dark assets" — vast amounts of information emerge, along with potential new insights and business value.
