How the internet of things will streamline the supply chain

Stephan Romeder
posted by Stephan Romeder
13 November 2015

The internet of things (IoT) is a key technology for business. With the number of devices connecting to the internet growing from a few thousand in the 1980s to an expected 25 billion by 2020, organisations need to prepare for the inevitable, and the supply chain is no exception.

Currently, there are 4.9 billion devices connected to the internet, which equates to one device per person for over half of the world's population. The number of objects that are online and communicating has grown dramatically. For example:

• In 2012, the UK witnessed a "Twitter Dress" displaying content from the hashtag "#tweetthedress" become the first piece of clothing to connect to the internet.
• In 2013, smart devices were performing actions triggered by "iBeacons"
• In 2015, Apple Watches are tracking health data, storing event tickets and mobilising money.

In addition to being used for consumer devices the IoT is capable of positively impacting all aspects of the supply chain. Shipments can be traced through the delivery process, allowing manufacturers to initialise computer installation processes during transit, which will speed up implementations. When stock is low, the IoT will be proactive and will place orders for restock various items automatically, and equipment monitoring can also be used to predict when equipment needs service and maintenance.

Businesses in many industries can adopt IoT technologies to better track assets, control inventory and limit inefficiencies. Shipments can be traced through the manufacturing and transportation process in real-time, providing accurate delivery and improved customer service. Using 'big data' and the IoT, organisations can proactively replenish inventory based on exact physical data and forecasted demand that combines many factors, maintaining efficiency while never losing a sale due to out of stock merchandise. Embedded sensors can monitor finished products or equipment and predict, alert and even book service and maintenance.

Visibility into the supply chain will no longer be limited to simply when items will be shipped or delivered, but will expand to include exact time of arrival, temperature control and quality control information. All this data will be automatically recorded in the system, adding significant value by documenting each step of the supply chain process. Strengthened by advanced technologies, sensors and data generated by the IoT, businesses will benefit from a strong informed supply network that is able to predict, correct and even prevent problems before they occur, keeping their supply chain running at optimal efficiency.

The IoT will impact every stage of the supply chain. For example, product life cycle management systems will expand to incorporate various product performance measurements; Enterprise resource planning (ERP) systems will be able to monitor parts that need replacing; and customer relationship management applications will automatically notify customers of the need to replace the part before a fault occurs.

By integrating all supply chain related systems, businesses can revolutionise the customer experience and create a competitive edge. For example, a washing machine manufacturer that equips its products with IoT sensors can create a scenario where the washing machine automatically detects limescale build up before it damages the engine. The machine notifies the ERP system and checks if a replacement part is in stock. A technician then schedules a service call with the customer and replaces the part before the washing machine breaks down. 

By utilising IoT throughout the supply chain and integrating systems, companies can increase their efficiency and revolutionise the customer experience. Organisations that leverage IoT technology can take an important leap forward, widen the gap between themselves and the competition, and can become market leaders.

Stephan Romeder is general manager at Magic Software Enterprises Europe

Darmstadt-Dieburg, Hessen (DE)
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