'Internet of things' will significantly alter supply chains

Will Green is news editor of Supply Management
30 March 2014

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31 March 2014 | Will Green

A 30-fold increase in the number of internet-connected products in little more than five years will “significantly alter” how supply chains operate, according to analysts.

Gartner predicts the “internet of things” (IoT) will hit 26 billion devices by 2020, up from 900 million five years ago, and this will increase the amount of information available to supply chain professionals, as well as exposure to cyber risks.

Michael Burkett, managing vice president at Gartner, said: "It's important to put IoT maturity into perspective, because of the fast pace at which it is emerging, so supply chain strategists need to be looking at its potential now.

"Some IoT devices are more mature, such as commercial telematics now used in trucking fleets to improve logistics efficiency. Some, such as smart fabrics that use sensors within clothing and industrial fabrics to monitor human health or manufacturing processes, are just emerging." 

Gartner said such capabilities will allow supply chains to “deliver more differentiated service to customers more efficiently”.

"Supply chain leaders must design their processes to operate in this digital business world," said Burkett. "This includes fulfilling the new expectations of customers and the volatile demands that digital marketing will create. A future supply chain will meet those expectations by converging people, business and things in a digital value network, and incorporating fast-emerging capabilities such as IoT and smart machines into this design strategy." 

Gartner also said while 3D printing was in the early stages, it had the potential to “achieve supply chain bliss by postponing a product’s manufacture to the latest point in the supply chain”.

“If 3D printing delivers on this promise it would disrupt entire supply chains by responding only to actual demand, thus eliminating excess inventory and plant capacity,” said the firm.

Burkett said: "As the number of software-embedded digital-physical products grows, the methods of product development and life cycle management across the supply chain will change. Supply chain teams will have to take ownership for coordinating the delivery of quality-perfect orders of these digital-physical products. This extends beyond developing and ensuring quality of a single device to managing the larger complexity of these connected systems."

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