THE INTERNET OF THINGS AND 21ST-CENTURY SCM (PART 2)
We continue our exploration of the impact of the Internet of Things (IoT) on supply chain management with one of the clearest and most concise articles we have come across, from the software services provider Intelyt.
Five key components for deeper supply chain visibility. The simple ability to connect events and hard goods through disparate data sources and various networks is not enough to deliver results. Several critical factors must combine to produce an effective supply chain IoT programme that will lower costs, increase security and speed time to market. Delivering complete end-toend visibility in supply chain logistics requires the complete integration of five key components:
Intelligent, cost-effective devices. Devices that track location, measure conditions, provide a communications link and support the enabling of thousands of shipments a week, without affecting existing operational processes.
Global communications networks. This includes integration of both private and public networks to provide maximum visibility at all times.
Software solutions. The interface that collects the data, compares it with expected conditions and provides status updates and notifications at every point in the logistics chain, integrating this data with existing enterprise resource planning (ERP), the transport management system (TMS) and customer relationship management (CRM) applications.
Analytics. The ability to analyse data to help identify areas of optimisation, not possible without the granular level of data collected at every step of the supply chain.
Service offerings. Consultation and configuration for a business that provides a complete technology solution with deep features to meet any unique needs.
When these five facets come together, companies can make intelligent decisions about manufacturing and production timing and distribution needs. The visibility available to a fully monitored and optimised supply chain eliminates expensive decisions to expedite shipping of replacement parts, or ramping up production of a product for which all the parts are not present.
Securing intellectual property. Software companies go to great lengths to protect their intellectual property. Their ideas are their products. For companies that produce hard goods, however, the period between conceptualisation and market-ready is a vulnerable time for theft of intellectual property. Supply chains are particularly vulnerable, as most aspects of the supply chain are, by definition, outside of the control of the owner.
Theft of products or parts can be an expensive problem. Insertion of counterfeit products is an even bigger problem than theft. New supply chain technology lets owners “tag” every carton in a shipment, to confirm all shipments are from a certified origin, and receive notification any time the entire shipment is not all together in one spot. This kind of monitoring brings security to sensitive supply chains and protects intellectual property.
Monitoring environmental conditions. Today’s advanced technological landscape means that companies are producing complex parts for every industry — such as transport, health, defence and consumer electronics products — and those parts can be sensitive to environmental conditions that are commonly encountered in supply chain logistics.
Conditions such as extreme humidity or sudden shock can cause critical erosion, oxidation or breakage. And drastic swings in ambient temperature can also cause sensitive parts to degrade to the point of compromising their efficacy. These issues can be disastrous for any company.
These aren’t new conditions; shipments have always been exposed to the elements. But it’s now possible to get notification when the issue occurs, letting supply chain managers take immediate action. Shipments used to arrive at their destination without any information as to exposure to elements or other adverse conditions. It was only after parts were tested that plant managers could ascertain the suitability of the part.
Optimising other business areas. The new level of supply chain visibility creates opportunities to bring complete optimisation to every aspect of business operations. For example, detailed insight into the shipment of raw materials or components simplifies internal operations such as staffing and production scheduling.
Customer-facing operations are also more efficient: sales operations run better with a secure supply chain, and marketing people provide better product support.
The executive suite feels the impact, too. Finance has a better relationship with investors when products come to market on time and on budget. In the end, every aspect of the business has the clarity to run more smoothly.
The future. Production planning, and managing exceptions, involves a tremendous amount of labour-intensive activity, largely driven by the urgency created when there is a missing or damaged shipment in the supply chain. But what if shipments “talked” directly to ERP systems, to advise that a key component is delayed?
ERP systems could then respond by taking actions to address the issue directly, shifting production priorities and alerting key parties to specific actions required now. The future of supply chain visibility lies in the most granular view of the process, and that is the physical location, status and condition of the individual items themselves, as opposed to the truck, ship, plane or train they’re all supposed to be on.
The Link is coordinated by Barry Elliott and Chris Catto-Smith as an interactive forum for industry professionals. We welcome all input, questions, feedback and news at: BJElliott@ABf1Consulting.com, cattoc@ freshport.asia