Internet of Things Adds Intelligence to Supply Chain

Tuesday Dec 8th 2015 by Drew Robb
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Companies like Whirlpool and GM are using IoT technologies for smarter supply chains.

The supply chain is getting a lot smarter, thanks to the Internet of Things (IoT). This added intelligence results in lower costs and added efficiency for companies like General Motors and Whirlpool.

Passive sensors in the supply chain are being replaced with more intelligent versions which put companies in a better position to exert more control over the external environment and ultimately execute better decisions, said Noha Tohamy, a Gartner analyst. For example, IoT-enabled factory equipment will be able to transmit temperature and machine utilization parameters, change equipment settings and optimize process workflows to raise overall supply chain performance and efficiency.

IoT in the Warehouse and on the Factory Floor

One example is GM's Plant Floor Controls Network, which utilizes Cisco's IoT technology. Sensors installed throughout GM's manufacturing plants measure building humidity and adjust the assembly line so cars are not painted in overly humid conditions, which impairs paint quality. Cisco reckons reductions in repainting have saved GM millions.

Manufacturing and logistics are in the forefront of the push for an IoT-enabled supply chain. An injection molding company, for example, has set up its parts "crib" (or bin) on its shop floor, networked it with its xTuple ERP system and connected it to vendor systems for stock replenishment as a way to remove human interaction, and to keep work flowing and customer demand supplied, said Wally Tonra, vice president of Sales at xTuple.

He thinks IoT's impact will be felt in three key areas: making a profit, keeping product on the shelf and staying compliant with certifications and regulations. This encompasses areas such as inventory flow, factory climate conditions, the detection of the presence of allergens, product shrinkage, equipment monitoring/tracking, delivery, stock/ingredient/component replenishment, inventory control, product lifetime expiration dates and maintenance.

"The biggest challenge of integrating IoT with existing supply chain systems such as a company's ERP is to stay focused on the business goal and implement those integrations that will fulfill the overall needs of the specific business," Tonra said.

Dynamic Supply Chain

Aerospace is also an early adopter of IoT. Boeing, for example, uses Zebra's Real-Time Locationing System to improve worker safety by tracking the location of workers along with the status of their safety harnesses.

"Dynamic processes that rely on people and assets that are in motion can benefit from IoT," said Mark Wheeler, director of Supply Chain Solutions at Zebra Technologies.

Whirlpool harnesses IoT technology to locate misplaced inventory using radio frequency identification (RFID) tags and networked readers that employ Omni-ID's ProVIEW system. The elimination of paper tags and manual tracking of parts and equipment in the warehouse results in lower inventory levels and greater efficiency.

Instead of a paper label on a container, an e-paper tag dynamically updates with instructions depending on its location. For example, a pallet of parts is delivered to the cross-dock; its e-paper label indicates what is in the container, and upon arrival an instruction on where the pallet should be delivered is displayed on a screen. If circumstances shift, an instruction is sent to the pallet to indicate that it is to be delivered to a new location at any point in the process.

"These smart containers are bringing the power of IoT to the users and interacting with them," said Ed Nabrotzky, chief solutions officer, Omni-ID. "You then have a real-time supply chain where containers can be re-dispositioned as needed and re-labeled automatically so they can be delivered to the right place, at just the right time."

IoT brings the same level of trackability to the B2B supply chain that consumers now enjoy when ordering a package shipped by UPS or via Amazon, he said. Instead of just affecting the shipping side, though, IoT's impact will be experienced across the entire supply chain from sourcing, to reordering of components, just-in-time manufacturing and warehousing.

The most immediate value gained from IoT has been in the form of improved supervision and monitoring of processes, Nabrotzky said. But the biggest benefits will result as more IoT-enabled systems are linked and thus spontaneously able to reconfigure the supply chain with dynamic routing to solve real-time problems or re-route items instantly based on customer changes.

Is IoT the Boss of You?

This, however, will require a mindset change across the supply chain, particularly from larger companies that are accustomed to centralized control. They will have to relinquish a good portion of that control to software-based systems that track and automatically make decisions aimed at improving supply chain efficiency.

"Letting the system become more dynamic is a struggle conceptually for the supply chain industry, which is so very used to specified processes and control," Nabrotzky said.

IoT Security

As IoT is fairly new, best practices have yet to emerge. But one area looms front and center for most companies contemplating this new field: security. As a result, some early best practices are emerging around data security.

"Security concerns can be addressed by leveraging existing standards and best practices for connecting the asset to IoT," said Wheeler. "A key challenge is securely managing the complexity of the implementation and enabling the power and dynamism of cloud computing to analyze the data provided and deliver value to the enterprise user."

IoT and RFID

Beyond that, RFID is emerging as a standard practice in many IoT projects.

"IoT within the supply chain allows for awareness of where items are -- from manufacturing through distribution," said Steve Hudson, president of View Technologies, the maker of the inView IoT platform. "Especially if items include RFID tags, you can know where items are made and shipped and when they reach the point of sale. All of this data creates a greater foundation of information and visibility that can help improve the growth of a company and operational efficiencies."

Instant, automated data capture opens the door to continuous visibility of inventory and avoidance of manual cycle counts and inevitable human error. This allows you to go from 60 percent visibility in your typical shop floor to 95 percent or more, he said. That, in turn, leads to streamlining of processes, better decision-making around stocking and fulfillment needs, and increased velocity of product shipping.

IoT and the Little Guy

While companies like GM and Whirlpool are already heavily invested in IoT, other large companies will take a more conservative approach. This opens the door to increased competition from small companies and startups eager to embrace IoT.

Take the trucking example mentioned earlier. If huge trucking concerns are slow to adopt IoT, they could find themselves losing ground to smaller independents who use IoT to get the job done faster, cheaper and better.

"The Internet of Things gives managers, especially manufacturers and distributors in the supply chain, the visibility and data to outthink, outsmart and outperform their competition," said Tonra. "When IoT is brought to scale by small- and mid-sized business, they can become competitive with the behemoths in their industry."

Drew Robb is a freelance writer specializing in technology and engineering. Currently living in Florida, he is originally from Scotland, where he received a degree in geology and geography from the University of Strathclyde. He is the author of Server Disk Management in a Windows Environment (CRC Press).

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