Why the IoT is the Key to Efficiency in the Supply Chain
We’ve all heard of the proliferation of the Internet of Things (IoT), but in reality, the IoT hasn’t even reached its peak yet. Gartner predicts 2016 will see 5.5 million new IoT devices every day, with a total of 6.4 billion used around the world. With so much connectivity comes untapped potential, especially in the supply chain and global logistics industry.
Beyond the obvious supply chain role of getting these connected devices from factories and warehouses into the hands of users, connected devices can deliver some significant benefits within the supply chain itself. The IoT is part of a new wave of innovation for the global logistics industry, bringing with it a level of efficiency that supply chain professionals from years past would not have experienced.
Sensors are being deployed throughout forward-thinking supply chains, making every inch of the global supply chain a data point that can be captured, analyzed and fine-tuned for increased efficiency. Now that supply chains are part of the connected world, organizations across the globe are realizing significant benefits, including:
- Visibility: The number one thing that advances in IoT have created is the ability to have greater insight into exactly what is happening at any stage and at any time in the supply chain. Supply chain professionals can now gain a much better understanding of exactly where each item is and how long it’s been there, arming them with the data they need to make informed decisions. Before the connected world came to be, companies struggled to understand their supply chains, getting only occasional updates and an outdated recap report, but all that dated information provided was historical looks back; it was much too late to make any real changes or adjustments.
- Operational Efficiency: The real-time visibility enabled by the IoT enables information to be shared at every level – allowing deficiencies to be identified quickly so that problems can be immediately rectified, or possibly even prevented altogether. Companies can see delays, slowdowns or trends that will affect the bottom line and inefficient processes that are costing them money can be identified and corrected. Rather than relying on anecdotal information from different teams spread across disparate locations, management can easily access a real-time snapshot of supply chain analytics and make decisions accordingly.
- Customer Service: By allowing companies to redesign supply chain processes for greater efficiency, the IoT is helping organizations dramatically reduce the amount of time from click to fulfillment. The fast and efficient delivery enabled by real-time data access is now essential in order to meet consumers’ expectations. Customers also demand access to information – from up to the minute details on where their item is in transit to accurate alerts notifying them of delivery dates and times.
- Inventory Management: Today’s customers expect products and services exactly when and how they want them. The IoT allows organizations to automatically know when products must be restocked or reordered, eliminating delays or inventory issues that would send customers to the competition.
- Loss Management: With sensors tracking every movement, it’s now almost impossible for merchandise to simply “fall off the truck” en route to its final destination, whether it’s a retail location or a customer’s front door. And if it does, management will know exactly where the incident happened and what factors may have contributed to merchandise loss. Issues and weak spots within the supply chain can be identified before they become a problem that impacts revenue and customer satisfaction.
The hyper growth of IoT does, however, require new business models, including a totally different organization of supply chains, along with the appropriate use of software in product development and product revenue models. Security also remains a significant concern with the IoT. Entitlement management plays a key role in this regard, serving as the authorization system in the access control application security model. Entitlement management authorizes users and confirms what they have, what they can see and what they can do. With a strong entitlement management system in place, it is easier for companies to take advantage of the IoT.
All in all, IoT technology is well on its way to transforming our supply chains. The companies that can take advantage of these benefits in the near term will save money, increase efficiency and keep their customers happy.
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