Internet of Things

Internet of Things (IOT) is a term first used in 1999 which essentially “describe a system where the Internet is connected to the physical world objects via ubiquitous sensors” ^{(Internet of Things)} and for which RFID technology is considered the driver of the whole process at the moment. The human object interaction scenarios such as turning on the microwave oven or the air conditioner from hundreds of miles of distance or getting real-time doctor’s advice on the blood sugar levels across the continents are a powerful inspiration for supply chain managers.

The brief definition of IOT is here:

SCM connects business to customers, uniting many activities such as planning, coordinating and controlling of raw materials, parts and finished goods. While volatile demand is challenging the manufacturers, increasing competition is also dictating them to get involved with companies in the whole network for which IOT solutions offer better incentives.

Supply chain visibility

A study conducted by Forrester Consulting reveals that by the implementation of IOT solutions supply chain visibility is the most desired outcome for the companies. Following graph shows other areas of interest, and it is interesting to note that there is good percentage of companies which are ailing to use such solutions for other purposes like better labor utilization and security and surveillance.

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Mostly, traditional SCM systems receive manually collected data for the processing decisions in subsystems but IOT based systems’ distinction will be that they will collect the data automatically. The humongous data collected from various sensors to improve the effectiveness and efficiency of a SC network also emphasizes the techniques of efficient data processing. ^{(Lou Ping, 2011)} proposes the following distributed and multi-agent architecture that may suits this requirement.

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The technology components that are required to implement Internet of Things solution are following ^{(Building Value from Visibility, 2012)}

Component	Description
Services	Systems integrator and services organizations provide integration and solution implementation services for IOT projects.
Software	Middleware and application infrastructure vendors provide information for analytical engines regarding IoT endpoints and enable vertical market solutions.
Hardware	GPS chips, RFID sensors, actuators, and embedded and external hardware devices capture location and status information.
Network	Network access, satellite, and transport infrastructure vendors provide the network connectivity that underlies IoT solutions.
Analytics solutions	Business intelligence and analytical software solutions such as data mining and predictive analytics, video image analysis, pattern recognition, and artificial intelligence algorithms determine whether to act on or ignore a pattern.

IOT base solutions are in their early stage of adoption but there is clear indication that majority of organizations will be investing in this area in coming 3-5 years. IOT solution provides a better management of fixed assets. For years systems has focused on security and loss prevention needs but now increased interest in IOT solutions is due to its ability to give valuable information about plant, equipment and people using relatively inexpensive devices. It maximizes the utilization of the assets and minimizes the need to lease or acquire more plant by monitoring customer and supplier transactions and alerting about demand and inventory levels, making inventory deployment efficient.

In my opinion, It will become extremely important for CIOs to be vigilant and spread the awareness about the Internet of Things within their organizations to get the best possible outcome, as in years ahead more and more sensors will monitor supply chain which may impact company’s interaction with the whole network and that is crucial to remain competitive.

I believe that in the future IOT will remove some of the players from the supply chain. For example, if the information about the necessary refill at the customer premises is directly transmitted to the manufacturer, there will be no need for the supplier or retailer. Manufacturer can use the services of any freight company to deliver the goods at the customer’s doorstep. In this scenario, would this IoT change be able to offer any opportunity for some other player to flourish in the supply chain competition?

Works Cited

Building Value from Visibility. (2012). Building Value from Visibility.

Internet of Things. (n.d.). Retrieved 03 2013, from Wikipedia: http://en.wikipedia.org/wiki/Internet_of_Things

Lou Ping, Q. L. (2011). Agile Supply Chain Management over Internet of things. International Conference on Management and Service Science (MASS).