12 June 2019
For many, the (IoT) may still feel like a new concept. It can certainly be hard to grasp what is meant by the term, let alone how it might apply to logistics and the supply chain.
It is essentially the extension of internet connectivity to physical devices, creating a vast network of devices embedded with electronics, software and sensors that enable them to collect and exchange data. Actions can then be taken based on the data either in line with predefined rules or, more powerfully, after processing by human or Artificial Intelligence (AI).
IoT technology is used in logistics and supply chain management in several ways, including the use of sensors to collect and transmit data that monitors the condition and location of goods, stock levels, and even reusable assets. In pharmaceutical supply chains, IoT devices can support the need for constant and precise monitoring. IoT for container management provides enhanced visibility of the environment inside refrigerated containers, reducing inspection time and costs at destination. In the 2 Wheelers industry it could solve operational challenges, streamline cradle management processes and accelerate transit time.
IoT also has applications in manufacturing and retail sectors that allow logistics providers to offer increased value to clients. In just-in-time manufacturing environments, IoT data can help improve inventory management and production scheduling accuracy. Harley-Davidson, for example, connected each machine in one manufacturing location so it could continuously measure and analyse performance. The move, along with other digitalisation improvements, saw operating costs fall $200m, build-to-order cycles reduce by a factor of 36 and resulted in a profitability gain of 3-4% *.
AI can detect and analyse patterns in data captured by IoT devices, helping to predict and mitigate disruptions and deepen understanding. Such analysis can even adjust the actions of the IoT devices themselves and distribute the insights and new parameters to all devices. A car manufacturer uses AI and IoT in this way – cars capture data relating to driver and pedestrian behaviour, which is then analysed by AI before the ‘lessons’ are distributed across its network.
The supply of always-on connectivity is a challenge for the estimated 26 billion IoT devices that will be active by 2020 *. IoT devices rely on stable internet connections with sufficient bandwidth to handle potentially large exchanges of data. Loss of such connectivity, especially when it may lead to loss of visibility in a temperature sensitive consignment resulting in the goods being written off, for example, remains a risk. Data volume can be an issue too, and the development of 5G mobile networks may be required to fully unlock the next phase of IoT development. Data must also be stored and secured in line with prevailing regulation. While not directly limiting IoT as such, the data holds potentially significant value for non-authorised parties that may wish to access it. Guarding against such threats can be a resource intensive task.
Identifying and measuring ROI also remains a significant challenge in IoT. The benefits can be diffuse, and the additional value created can be a result of using IoT to further leverage existing assets business models. Perhaps as a result, the majority of IoT implementations are aimed at reducing costs (54%) or improving safety (24%), with only a minority intended as revenue drivers in their own right (35%)*.
With more than three connected devices for every person on the planet, the IoT ecosystem will continue to grow. Already, tangible results can be seen across consumer markets and industrial settings as well as in logistics and supply chain management. IoT is here, and the potential suggests that once regulatory and connectivity challenges are overcome, a more connected world offering new applications and deeper insights will come from the Internet of Things.
GEFCO have integrated the potential of the IoT, particularly in the field of tracking assets and goods. Our teams have in-depth knowledge of the different technologies, communication networks and cloud based collaborative platforms. GEFCO are currently engaged in pilot projects for major customers with the aim of increasing the reliability of their supply chain and reducing costs.
IoT Project Manager at GEFCO