How the Internet of Things can transform post-Brexit supply chains

posted by Tim Stone
9 April 2018

As the UK looks to global trade post-Brexit, the Internet of Things could provide fresh opportunities for British businesses, says Tim Stone of Breed Reply

Brexit, well before the recent KFC issue, has stirred a wider interest in supply chains. These complex networks are the vital arteries of any successful enterprise – the serious businessperson never underestimates their importance.

As such, any potential disruption – good or bad – to supply chains demands a company’s full attention. It’s the area where efficiencies are most keenly sought. Enter the Internet of Things (IoT), which is beginning to transform the management of supply chains and create new ways of working.

For the UK, the widespread adoption of IoT can provide a way to limit some of the negative disruptions of the decision to leave the EU and for companies it can reduce costs and improve service. At the heart of IoT is insight. The ability to collect data from various processes, combined with analytics and tools such as AI, means a richer understanding of what is happening across an organisation and more automated decision-making.

Greater insight improves supply chain management. We believe manufacturing, which has the most complex supply chains, can benefit the most. For manufacturers, the combination of IoT and radio-frequency identification (RFID) means a real-time picture of the whereabouts and details of individual components and products across the supply chain.  The ability to share this information and provide information about any manifest with customs can speed the process of goods across borders. 

As well as smoothing the customs process, IoT allows a much broader integration and sharing of data with suppliers and customers, especially when combined with other data sources.  For example, the truck guided by the latest traffic and weather information saves time and money. Or predicting when more materials are needed and linking directly with various suppliers to order at the best price without the need for human intervention means no more shortages.

For manufacturers, margin improvement is the key to better financial performance. Competition reduces the wriggle room to raise prices, so the focus is on lowering costs without compromising quality. Small improvements in each moving part of the supply chain can have a dramatic impact on the balance sheet.

If you can speed up each delivery by an hour, added together over hundreds of journeys, that means millions saved. IoT is the chance for manufacturing to make significant margin gains. Predictive maintenance can help reduce machine downtime, smart energy networks can save millions from wasted electricity, and better supply chain management can dramatically improve efficiency and even wastage losses.

In reducing waste, IoT presents a big opportunity. For some companies, moving goods is one thing but the temperature, for example, of certain foods and medicines are stored at when doing so is vital. Norwegian start-up, TAG Sensors has developed a market-leading technology using RFID that means it is possible to have real-time temperature logging of individual products during transportation and storage.

In the food industry, an estimated $750 billion is lost each year from poor cold-chain management (where items are spoilt between production and distribution because they have been stored at some point at an incorrect temperature without being noticed). TAG Sensor’s technology alerts quality managers when the temperature is erroneous as well as mobile applications and gate readers so action can be taken before it is too late.

The adoption of IoT technology, provided by innovative companies like TAG Sensors is still in its infancy, but the benefits are clear. For a country like the UK that is looking hard at how it trades with the world, it is vital that more and more companies begin to look at the opportunities now before the so-called ‘fourth industrial revolution’ passes them by.

Tim Stone is venture partner director at Breed Reply, Europe's leading investor in early-stage IoT companies 

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