Lightbulbs that change colors from a command on your phone and turn on when you enter the room, thermostats that can figure out when you are in the house and adjust accordingly, refrigerators that e-mail you when you are out of milk, garage doors that let you know when they are open, doors that can be unlocked from your phone even when you are across the country, cars that drive themselves, tags you can put on your keys so you will never lose them again. These are all examples of the internet of things. Some of these examples are fluff and likely won’t pan out, others may be real game changers. Being a bit of a techie nerd, I’ve been following the Internet of Things (IoT) evolution on the consumer device market for a while, but I honestly haven’t given much thought to how the IoT will impact supply chain. This morning, I happened upon a video presentation from MPI and Rockwell Automation titled A deeper dive into the industrial internet of things on the Industry Week website. The video was a report out and analysis of a survey that MPI had done on Internet of Things in the supply chain. There were lots of interesting facts and figures in the report, but one fact that stood out to me was this. In a 2014 study, 46% of manufacturing executives didn’t know what the internet of things was. A logical extension of this is that they also wouldn’t know how IoT could impact the supply chain. Maybe it’s time to understand how IoT will interact with and ultimately change the Supply Chain. So what is the Internet of things? The source of all knowledge, Wikipedia, describes the Internet of things as:
“…the network of physical objects—devices, vehicles, buildings and other items—embedded with electronics, software, sensors, and network connectivity that enables these objects to collect and exchange data”
For consumer devices, we’ve seen examples of this at work for a number of years. More and more devices are getting internet connections and are either sending or receiving data. But what about supply chain? Last year, Deloitte University Press published an article on the Internet of Things titled “Forging links into loops: The Internet of Things’ potential to recast supply chain management”. In that article they identified a number of examples where smart devices and sensors in the supply chain could significantly change how supply chain works. Here are some examples: Manufacturing monitoring – Devices measure ambient temperature, humidity, air pressure, etc. and either prevent operations or re-route if the ambient conditions fall outside specified parameters. One example of this would be painting where applying paint in a too humid environment can cause the paint to not cure properly. In a previous life, we had examples where aerospace products were produced in a non-air-conditioned factory but measured in an air-conditioned QA lab. Needless to say we had scrap issues on a hot day. Other examples might be real-time utilization data on a machine or bottleneck tracking based on queue sizes. Inventory Tracking – Despite all the efforts manufacturers put into inventory accuracy it still happens. You think you have X units of Product n, but you really have Y units…where Y units is less than what is needed for the next order of the product. Imagine if your inventory itself could tell you how much there is. It could be as simple as an RFID device on each item or case that responded to sensors around the factory giving real-time information on what inventory was on-hand. Shipment Tracking – What about outside the four walls? One of the things I love about ordering things on-line is tracking the shipment as it wends its way from wherever it originates to my front door. That capability has existed for years and is typically accomplished via a bar-code scan as the package moves from stage to stage. In the internet of things model, that tracking information can be augmented by sensors in the container that can measure ambient variables such as temperature, humidity, air-pressure and even light levels. This way, logistics can monitor sensitive shipments to ensure the product will not have been damaged in transit before it arrives. Re-ordering – One of my favorite examples of what could be with the internet of things was the connected fridge. Imagine if the fridge (and your pantry for that matter) was able to keep track of what was put in and what was taken out. If your milk, for example, fell below a certain level, milk would automatically be added to your grocery list. If the mayonnaise is past its expiry date, an alert would be sent to your phone so that you’d know to throw it out…and that you should by some more. The same logic could be applied to supply chain. If the assembly shop takes a widget out of the bin and now the weight of widgets in that bin falls below the re-order threshold, a replenishment order is generated. Note that ERP inventory accuracy no longer is a constraint on when re-ordering happens. There are lots of other examples where connected devices, tags and sensors could eliminate guesswork and risk in the supply chain. The only limit is your imagination… and the inherent security of IoT. As with anything on the internet, there is risk associated with placing data and devices in areas where they could be exposed to loss due to inadequate data security. Jim Fulcher takes this issue on in his article Ways to help ensure IoT security. Having a physical supply chain that can sense and report changing conditions is only half the battle. Your planning system has to be able to respond to changing conditions too. Imagine this scenario. You have a shipment of sealant inbound that is rendered defective if it’s allowed to freeze before being applied. You receive an alert on your phone that the ambient temperature of this shipment has dropped to -1 degree Celsius and falling. A quick phone call confirms that the heater unit on the truck has failed and the shipment is ruined. Where else can I get this sealant? When can I get it? What customers will be impacted by this event? What impact will we see to revenue / margin because of this event? What other options do I have and what will be the impact of those options? You see, the Internet of Things on its own provides significant improvements into visibility and the speed at which you know about events. But without the ability to analyze and respond, you aren’t getting the full benefit of IoT.