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.