The Internet of Things or “IoT” is defined as “a system of interrelated computing devices, mechanical and digital machines, objects, animals or people that are provided with unique identifiers and the ability to transfer data over a network without requiring human-to-human or human-to-computer interaction.” So it really comes as no surprise that the supply chain industry has moved to adopt IoT as a way to increase their efficiency and overall productivity.
IoT is nothing new to supply chain companies, in fact they’ve been utilizing it for decades on a smaller scale. UPS, for example, has been using barcodes and handheld scanners connected to wireless networks to optimize their efficiency. IoT and supply chain industry experts are working hard to find ways to implement IoT technologies on a large scale across the entire industry.
IoT companies like Gemalto, which provides software solutions and cyber security to companies and governments around the world have seen exponential growth. Gemalto was founded in 2006 and is now valued at 4.42 billion euros or 5.29 billion American dollars. A Gemalto representative stated that “IoT technology is revolutionizing supply chain management across many different vertical markets, allowing improvements in efficiency, productivity and profitability.”
There are two major challenges when it comes down to improving IoT through supply chains: cost and accuracy. The Implementation of this technology is very expensive. Installation, monitoring and network access all come with a hefty price tag. Technology within this space is typically sold with the notion that unless they’re “always on” and data-driven thus allowing IoT companies to charge very high subscriptions.
As the supply chain industry becomes more and more competitive, companies need to pursue every opportunity to increase control and visibility in order to lower costs. Optimization is possibly the most critical area in which control and visitability reduce costs. Visibility is the ability to identify and share events as assets journey through the business process. Increased visibility allows companies to react in real time to errors or conflicts that could potentially have major financial implications. Additionally, it provides data for future large scale analysis and process refinement.
Tracking packages is not a new idea, it’s just one that needs to be updated. When you receive a notification about your package arriving at a distribution center for example, the truck will arrive, it will be scanned by a worker, then another employee is tasked with sending out the notification. Better technology will allow for more connectivity and more efficient ways of tracking items. The potential of IoT in supply chains would result in potentially billions of dollars in increased revenue. Additionally, it could lower shipping costs and increase delivery speed.
The supply chain industry has only scratched the surface of IoT integration. In an effort to become more efficient, companies are investing billions of dollars in IoT technology. IoT will only continue to grow, and with every new step in innovation, there will be new challenges and new opportunities for supply chains around the world.