Many business organizations are currently redesigning their supply chain management to adapt to the modern age. The objective behind this is not only to meet consumer needs but also to address the major blockages which prevent business growth. For example, some of the key supply chain related challenges confronting businesses across the world are: delayed order delivery, unpredictability of market trends and supply disparity. The advent of the Internet of Things (IoT) is changing supply chain functions and has the potential to deliver efficient and rapid solutions required to address these supply chain challenges. All this by using embedded sensor technology, data science, predictive maintenance and machine learning.
In fact, Gartner estimates that more than half of new business processes and systems will incorporate some element of IoT by 2020. By 2025, the IoT will have a total potential economic impact of anywhere from $3.9 trillion to $11.1 trillion a year, predicts McKinsey & Co. Of this total, business-to-business (B2B) applications will likely capture nearly 70% of the value, McKinsey says.
As a business organization looking to improve and modernize your supply chain, you may want to leverage the following features of IoT in supply chain management:
With IoT, businesses can benefit from real-time monitoring and accurate tracking of the supply throughout the product life cycle using location-based services. This will help to ensure timely and quality delivery of services and improve customer satisfaction.
Improve Transactional Efficiency
In the retail industry, many businesses struggle with consumers complaining about delayed product delivery, and damaged or misplaced orders. Such cases could be prevented with the power of cognitive computing to analyze data and offer deep insights.
Cognitive computing techniques is effective in keeping track of inventory and consumption levels; and in auto-replenishing the stocks, as and when needed, using efficient algorithms. Besides, cognitive computing can offer end-to-end visibility of entire product shipment processes and automate the delivery process so that the supplies reach the consumer on time and in good shape.
Cognitive computing algorithms are also helping retailers in: reducing the ordering-to-shelf cycle time, reducing supply/demand disparity and reducing cases of lost or damaged goods.
Efficient Inventory management
Using IoT, the supply chain stakeholders can build an efficient inventory system. This will allow the information related to finished products, volume and time of orders, raw material availability, inventory and manufacturing capacity to be captured using intelligent IoT devices.
Such streamlined inventory systems will help in increasing profitability, reducing loss due to waste and damage, and improving customer satisfaction through on-time delivery.
Innovation & Product Support
With IoT embedded in products, manufacturers can get real time customer feedback on the usage, success and failure of a product. Such information can help manufacturers in design decisions made in the early cycles of product development to enhance and optimize for supply and manufacturability. Additionally, this information can be shared with key suppliers during product innovation and development processes to further improve product capabilities.
Improved Alignment & Collaboration
Sales and Operations Planning (S&OP) processes are responsible for coordination among sales, manufacturing, and distribution, however there are still gaps between sales, marketing, strategy, and operations in many businesses. Sometimes, this happens due to lag time in demand, supply, inventory and supply chain information.
The use of IoT can enhance the S&OP process by providing real-time visibility to all the key dimensions for success–demand, supply, inventory, product, risk, and performance–across the organization and throughout the extended supply chain. Having real-time visibility of performance and collaboration can help companies to improve alignment across the enterprise to achieve the right balance of supply and demand, aligned with strategic business goals.
Sustainability & Quality
Nowadays much emphasis is placed on sustainability and quality. In fact, studies show that companies striving for social and environmental sustainability achieve major competitive advantages, especially with regard to production efficiency, supplier management skills, and attractiveness to employees.
Using IoT-enabled sustainable operations, businesses can have real-time visibility to energy and resource consumption and resource or material movement. This can lead to the reduction of carbon inefficiencies, minimized energy consumption and optimized travel and transportation.
Furthermore, IoT can provide a controlled approach to quality management, helping you identify defects at the source. This can be done by incorporating checkpoints for key operations, which will allow you to verify that items meet standards and design specifications from material receipt to the shipment of the end product.
As far as safety is concerned, IoT applications can help companies monitor atmosphere, radioactivity, sound, pressure, temperature using remote sensors to ensure the safety of your workers.
Today, the demands on supply chain managers to keep up with change and increase profitability are greater than ever. Incorporating IoT can provide significant opportunities for companies to deliver value and improve performance through better predictability, adaptability, innovation, alignment and sustainability across the value chain.