31 July 2014 | Peter Kinder
The internet of things (IoT) is a worldwide phenomenon that procurement professionals simply can’t ignore.
This fast-growing trend, in which internet-enabled devices ‘talk’ to other web-enabled systems so data can be captured, communicated and analysed, will revolutionise our daily and working lives. Analysts predict by 2020 there will be over 50 billion ‘things’ or machines connected to the internet – far more than there are people.
The potential of the IoT is unlimited. From smart baby monitors that enable you to see, hear and interact with your baby (or pet) to location-based devices that help you locate products in shops and contextually suggest things for you to buy based on your preferences. The IoT even influenced the World Cup by providing remote controlled security robots and ATM-like cards to players providing everything they need to know from tactical strategies and information about their opposition.
But what opportunities and challenges does IoT present to businesses and more specifically procurement teams and supply chains?
Procurement and supply could benefit significantly from IoT enabled devices and solutions which seamlessly manage areas like the monitoring and reordering of stock. One example could be weight-operated warehouse devices which can automatically sense when stocks are getting low (similar to supermarket self-checkouts). These could ‘talk’ to stock management systems to ensure just the right amount of stock was held at any time.
Another area could be the use of building sensors and monitors which alert service and maintenance teams to equipment failure more quickly and accurately, even providing diagnostics data to ensure the right technicians are deployed with the appropriate spare parts. This could help to reduce maintenance costs, or in the case of outsourcing, give procurement an insightful window into supplier performance.
But for all the anticipated benefits, the IoT could also present an obstacle for procurement teams – in the form of data overload. The explosion of the IoT, cloud and mobile technologies has the potential to make procurement more challenging due to the ‘avalanche’ of data that could be flowing into organisations. Procurement processes and technology will need to adapt to make effective use of this data, finding ways to act on big data analysis rather than simply giving procurement people more information to digest.
To realise the real benefits from the IoT, purchasing and supply chain professionals must ensure they have the right systems and processes in place to tightly manage and route the multitude of data that powers IoT devices and solutions.
The ability to embed IoT enabled technologies into buying and ordering processes presents a significant opportunity for procurement professionals to automate simple tasks and make predictive decisions. This moves away from the burden of transactional management towards becoming more strategic and offering greater value to businesses.
What do you think? Is IoT a ‘hit’ or ‘miss’ for procurement?
☛ Peter Kinder is chief technology officer at Wax Digital