Wednesday, October 8, 2014

SCM 2.0 and the Internet of Things

When the Internet came into being in the 1960s, nobody really could understand the potential it carried along with it. It has made amazing things possible throughout its evolution. Till the introduction of mobile devices, Internet was fixed to a desktop on a table that could connect to another desktop located elsewhere. Mobile technology in an unprecedented way has leveraged the Internet to create what we know today as the “Internet of Things” (IoT). According to a study by Cisco Systems, around 25 billion devices and objects will be connected to the Internet by next year and that number is expected to double to about 50 billion devices by 2020. So what exactly is the IoT and why should the supply chain industry care so much?

Imagine you are getting ready for a marathon run. The best way to prepare for your run is to see how you did on your previous practice run and improve on it. Shoe manufacturers have developed “Smart Shoes” which can transmit data right from your shoe to the Internet where your run data is processed and presented to you on your smart mobile devices in real time. The shoe here is a perfect example of a “Thing” that comprises of a larger IoT. Refrigerators are now being used to keep an inventory of items in it and warn you if something approaches expiry. There is an active “push” of data onto the Internet cloud that aims at majorly one thing, improving visibility and making sense of the data. This is exactly the characteristic of the IoT that is heavily leveraged by the supply chain stakeholders. Improve visibility!

In my previous blog on effective inventory management, I had discussed how the RFID technology is being used to help improve end-to-end tracking of items in the supply chain. RFID complemented with the IoT, can take inventory management to a whole new level. With RFID data being continuously pushed onto the cloud, could help decision makers make faster and smarter decisions in real time. Lets look at an easy example here. Suppose there is a shipment of goods in transit from New York to Pittsburgh. You as the logistics head have pre determined the best path that the truck should take to reach Pittsburgh. But what if your truck gets stuck in traffic along this route. GPS data is continuously transmitted to the cloud and in such a scenario, it can immediately alert you on your smart phone that there is a problem. You can then, in real time, take quick decisions and reroute your truck to an optimized path in order for on time delivery of the shipment. That is the power IoT can give to decision makers.

IoT brings to the table richer data and deeper intelligence for all the stakeholders in the supply chain network. And the amount of data is growing exponentially. If supply chain experts are not able to tap into opportunities that technology is offering, they are sure to miss the bus. With all competitors looking at ramping up their supply chain networks with the use of IoT, it is essential to keep up to pace with it. Even the consumers are as much a part of the supply chain as are the manufacturers and the retailers. With IoT, their consumer behavior is constantly been fed back to the manufacturers, which is helping them in building better forecasting models for consumer demand. But with the enormous amount of potential that IoT possesses, it is yet to be seen what levels of imagination can it actually reach.


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