Clear Benefits of the Internet of Things (IoT) within the Supply Chain

Last modified: June 29, 2016

The Internet of Things (IoT) seems to be popping up in more conversations throughout the entire supply chain. More businesses are seeking IoT experts to discover how to reap its benefits. The Internet has transformed world communications. Suddenly, information and basic activities became available with the simple press of a button. This generated the need for and the creation of the IoT. Ultimately, the IoT will enable greater accuracy and troubleshooting throughout a supply chain’s processes. Fully automated benefits will be the rule in some cases which will decrease a company’s required people hours significantly. Let’s explore how the IoT is changing the supply chain universe in terms of how equipment works as well as trend analysis, shipping, and billing and receivables.

IoT and Machine Functionality

Manufacturing processes as a whole depend heavily on machinery. Moving parts such as conveyor belts or robotic arms are powered by a motor to complete their functions. Basic factors determining each machine’s effectiveness are operating temperature, frequency, and hydraulic pressure. At its core, the IoT serves to gather data and process information, but applications of the IoT can also pinpoint probable machine issues ahead of time.  This will prevent any delay in productivity by finding variations well in advance like a small shift in hydraulic pressure that doesn’t cause mechanical failure. Over time that small variation can lead to preventable and permanent problems within the unit or the system itself.

The IoT may pinpoint a problem and give detailed information on why and how to make repairs. Maintenance workers could be alerted to check an exact issue with their machines, or the IoT might simply upload new system firmware to correct the issue. The IoT is capable of giving detailed specifications for human maintenance crews such as which tools and parts to use for repairs, including instructions on how to replace the affected part. To maintain functionality, the IoT protects a company’s machines by halting production for needed maintenance. Even if a part typically requires replacement quarterly, a machine may be utilized beyond its average use and require additional servicing. In this case, the IoT takes stock of that machine’s needs and suspends its operation until further preventative maintenance can be completed.

IoT and Shipping Processes

There are many various delays, issues and waste that can arise during order fulfillment. IoT is capable of changing auto delivery systems and truck routes. Another possibility is to facilitate alternative product delivery such as IoT being employed to automatically deliver products via drones such as UVA (unmanned aerial vehicles). Catching issues and pinpointing inefficiencies prior to reduced productivity or breakdown greatly reduces supply chain expenses. Using robotics for fulfilling orders also accelerates customer deliveries after purchase by way of “item picking” through IoT. This increases business expansion through customer growth and retention.

Automated Data Transfers

When order placement occurs, the IoT enables automated transmission of the information. This process has already been deployed in vending machines owned by Cantaloupe System in California. Cantaloupe System uses the IoT to help monitor the temperatures of their vending machines, detect thieves, and monitor inventory. In the future, the IoT may allow vending machines to recognize dropping inventory, place orders for more product, recognize delivery of products, and generate a payment to the respective supplier. If this simple example is expanded into the supply chain of other niche industries, the possibilities for how the IoT could impact everyday business becomes infinite. Hospitals could automatically place new orders for supplies before existing stocks become scarce, which would improve patient outcomes and foster better nationwide health. The IoT already exists in many hospitals where electronic medical records identify problems in test results and generate a phone call to the respective nurse and physician for that patient. This leads back to our ordering scenario as the resulting medications administered may trigger an automated order to the drug manufacturer, acknowledgement of recipient of the order, pay for the items on delivery, and generate a resulting bill to the respective patients.

Analysis of Trends and Recommendations

By quickly collecting and analyzing information, IoT data must also be combined with analysis to generate useable recommendations on improvements within the supply chain process. Software in the IoT, which is  somewhat comparable to AI, is the driving force behind data analysis and recommendation.  To verify the areas in which an organization can amend their systems by knowledge of the system operations, the IoT adds insight into real-time occurrences and trends. Areas such as logistics tracking of shipments and also reverse shipments from consumers, owed balances, how and where to modify to meet EPA compliance, and in fulfilling orders are several examples.

The IoT is continuously evolving and will increasingly improve in the future making a marked impact on the world and in particular, supply chain processes. IoT integration is remarkably helpful to a growing number of companies who will continue developing and expanding today’s IoT capabilities. It follows that IoT will increase in use and popularity for many applications to come and benefit companies by increasing future organizational efficiency, effectiveness, productivity, and sustainability.

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